Amsyari Enterprise bought the secondhand motor vehicles for RM40,000. He incurred a major overhaul cost of RM10,000. The car was repainted for RM2,000. He also spent RM800 on road tax and insurance. He recorded RM40,000 as the cost of the motor vehicles whereas the other expenditure was treated as expenses. How the effect of the accounting error on Amsyari Enterprise’s statement of profit and loss and statement of financial position

Amsyari Enterprise bought the secondhand motor vehicles for RM40,000. He incurred a major overhaul cost of RM10,000. The car was repainted for RM2,000. He also spent RM800 on road tax and insurance. He recorded RM40,000 as the cost of the motor vehicles whereas the other expenditure was treated as expenses. How the effect of the accounting error on Amsyari Enterprise’s statement of profit and loss and statement of financial position

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 5PA: Jada Company had the following transactions during the year: Purchased a machine for $500,000 using...

See similar textbooks

Similar questions

Amsyari Enterprise bought the secondhand motor vehicles for RM40,000. Heincurred a major overhaul cost of RM10,000. The car was repainted for RM2,000.He also spent RM800 on road tax and insurance. He recorded RM40,000 as the cost of the motor vehicles whereas the other expenditure was treated as expenses.How the effect of the accounting error on Amsyari Enterprise’s statement of profit and loss and statement of financial position?
ou are working with an accounting firm. Sussie, who is representing Suss Co, needs advice about depreciating assets. She asks; what are depreciating assets? What are the different ways to calculate the declining value of depreciating assets? Furthermore, Suss Co has aggregated turnover of $ 2 billion. In December 2021, Suss Co purchased a machine for $4m, which was commenced immediately for an income-producing purpose. What tax does the Suss Co claim?
In September, Morrison purchased a new piece of machinery that will be used to manufacture its top selling product. The purchase price of the machine was $2,215. In addition, Morrison also paid: freight, $200; installation, $570; testing , $900; and repairs due to mishandling, $300. Ignoring the depreciation expense, at what cost should the machinery be recorded on the balance sheet?
In October, Dean Company exchanged an old packing machine costing P240,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P32,000. The market value of the old packaging machine was determined to be P140,000. How much is the cost of the newly acquired machine and the amount of gain or loss, respectively, that Dean should record on this exchange?
Gordon Brown Co’s Profit before tax was Rs7 million and a statement of financial position total of Rs23 million.Gordon Brown owns a number of its retail premises, which it revalues annually. This year several of its shops rose sharply in value due to inflated property prices in their locality. Gordon Brown does not revalue its factory premises, which are held in the statement of financial position at Rs 2.7 million. Briefly give your views on each of the above situations and state what type of auditor’s report should be issued and explain your choice. You should not reproduce the entire audit report. Only mention appropriate extracts which are relevant.
Pineapple Co. bought new tires for their forklifts for $1,200 ($300 each). Because of heavy use, the tires are only expected to last 10 months. How should the $1,200 cost be accounted for on the financial statements? Capitalized as an asset Written off immediately as an expense Recognized as a prepaid expense Depreciated at $120 a month
Early in the fiscal year, The Beanery purchases a delivery vehicle for $40,000. At the end of the year, the machine has a fair value of $33,000. The company controller records depreciation expense of $7,000 for the year, the decline in the vehicle’s value. Explain why the controller’s approach to recording depreciation expense is not correct.
Opal, Inc. owns a delivery truck that initially cost $40,000. After a depreciation of $15,000 had been deducted, the truck was traded-in on a new truck that cost $50,000. Opal was required to pay the car dealer $10,000 in cash. What is Opal's basis for the new truck?
The following Statement of Financial Position is related to Jeff Berhad. Additional information: (1) During the year, depreciation for machinery is RM22,750. Machinery with a net value of RM2,760 was disposed at a profit of RM2,000. (2) Depreciation for office equipment during the year is RM5,520. Office equipment with cost of RM24,300 was sold for RM18,780. Loss on disposal of office equipment is RM2,760. (3) The net profit before tax is RM41,770. Tax charge for the year is RM17,250. (4) The cash dividends declared were RM26,910. In addition, the company received cash from issuance of share capital and debenture during the year. Required: (a) Based on the above information, prepare the Statement of Cash Flows for the year ended 31 December 2020 for Jeff Berhad using the indirect method. (b) Based on your understanding, discuss which method is the better way to present the Statement of Cash Flows: Direct Method or Indirect Method?
On January 1, year 1, Wardags Co. purchased a P6,000,000 machine, with a five-year useful life and no salvage value. The machine was depreciated by an accelerated method for book and tax purposes. The machine’s carrying amount was P2,400,000 on December 31, year 2. On January 1, year 3, Wardags changed to the straight-line method for financial reporting purposes. Wardags can justify the change. Wardags’s income tax rate is 30%. In its year 3 income statement, 1. What amount should Warren report as the cumulative effect of this change? 2. On January 1, year 3, what amount should Warren report as deferred income tax liability as a result of the change?
DETL Corp. made an ordinary repair to a delivery truck with a remaining useful life of three years at a cost of $200. DETL's accountant debited the asset account, Equipment. Was this treatment an error, and if so, what will be the effect on DETL's financial statements?
Worthington Chandler Company’s fiscal year end is December 31. On January 1, 2016, Worthington acquired a piece of equipment for $40,000. Sales tax on the equipment was $2,000 and Worthington incurred freight charges of $600 to get the equipment delivered to its factory and $700 to install the equipment. a) What should be the amount in the equipment account as a result of these events? b) Assume that Worthington uses the straight line method of estimating depreciation and expects the equipment to be used for 10 years with a salvage value of $300. What is the annual amount of depreciation expense? c) At December 31, 2019 (Worthington's fiscal year end), what is the amount of accumulated depreciation on the equipment after the depreciation adjustment is recorded? d) At December 31, 2020 (Worthington’s fiscal year end), what is the amount of book value of the equipment?