Uncle Jackson owns and operates The Hammer- Mill, an entity that specialises in producing maizemeal and stock feeds. It is based in Polokwane Limpopo and has a 31 December financial year end.The entity is registered for VAT and so are all other entities that it is trading with. Assume all amountsare VAT inclusive unless stated otherwise.During the financial year ended 31 December 2019, you are presented with the following information:Land and bulldingsThe business has property that was acquired on 30 April 2017 at a cost of R 1 035 000. At acquisition,25% of this property constituted the land, the rest buildings. This property was declared ready for useas intended by management on 1 May 2017. In February 2019, Uncle Jackson decided to expandoperations into Tzaneen and bought a piece of Land worth R287 500. This transaction occurred on 28February 2019. He simply bought the land but decided that he would develop the land into anothermilling factory at the beginning of the 2020 financial year.It is company policy to depreciate buildings over their estimated useful lives of 25 years. The buildingshave a negligible residual value.Milling PlantThe Hammer - Mill purchased its milling plant on 15 June 2017 at a cost of R690 000. The plant hadto be installed and tested by qualified technicians. The installation and testing of this plant cost TheHammer-mill R34 500. 20 bags of maize meal were produced during the testing phase and were soldfor R92 each. The plant was declared ready for use on 1 July 2017.It is company policy to depreciate the Plant using the straight line method over its estimated life of 8years. The plant has a residual value worth 10% of the purchase price excluding VAT.Delivery vehiclesThe Hammer- Mill purchased light truck for use in delivering their products to their customers on 1July 2017. Uncle Jackson paid the full purchase price amounting to R195 500 on the same date viaEFT. This truck was ready for use on 1 July 2017. On 31 August 2019, Uncle Jackson sold this lighttruck for R97 750. He bought a new delivery van on 30 September 2019, which was ready for use onthe same date for R230 000. The amount was paid via EFT on that same date.It is company policy to depreciate the delivery vehicles over their estimated useful lives of 5 years usingthe straight-line method. Assume that the delivery vehicle has no residual value.YOU ARE REQUIRED TO:a)Prepare the Property, Plant and Equipment note as it would appear in the financialstatements of The Hammer-Mill for the financial year ended 31 December 2019.Note:Show all your calculations

The assets which are held for more than a year, and are used for the revenue generation are known as…

Answered: Prepare the Property, Plant and…

Prepare the Property, Plant and Equipment note as it would appear in the financial statements of The Hammer-Mill for the financial year ended 31 December 2019. Note:

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 41P

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