Q.1.2 Q.1.3 Q.1.4 Discuss how the replacement of the ceramic heater should be accounted for in the financial records of Baggage Solutions Ltd for the year ended 31 March 2021. Support your answer with calculations where necessary. Discuss whether or not you agree with the accountant to raise a provision for the estimated cost of the future major inspection in the financial statement of Baggage Solutions Ltd as at 31 March 2021. Prepare the following notes to the financial statements of Baggage Solutions Ltd for the year ended 31 March 2021. Property, plant and equipment (total column not required) Provisions Contingent liability
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- Baggage Solutions Ltd manufactures top of the range luggage bags that are extremely light weight, strong and durable. The company specialises in trolley bags, and these can be sold separately or as part of a set. The company’s financial year end is 31 March. The following information is available as at 31 March 2021. Land and buildings Baggage Solutions Ltd purchased land with a warehouse from Property Direct for R9 444 375, and the transfer of the land and building was concluded on 1 July 2019. The normal payment terms of Property Direct is 2 months after transfer date. The agreement between Baggage Solutions Ltd and Property Direct states that payment for the property should occur on 1 July 2020. The land constitutes 20% of the purchase price of the property. The useful life and residual value of the warehouse is 25 years and R900 000 respectively. On 1 April 2020 the fair value of the property is R8 700 000. Vacuum forming machine The machine was purchased on 1 April 2018, for R525…Hallergan Company produces car and truck batteries that it sells primarily to auto manufacturers. Dorothy Hawkins, the company’s controller, is preparing the financial statements for the year ended December 31, 2021.Hawkins asks for your advice concerning the following information that has not yet been included in the statements. The statements will be issued on February 28, 2022.1. Hallergan leases its facilities from the brother of the chief executive officer.2. On January 8, 2022, Hallergan entered into an agreement to sell a tract of land that it had been holding as an investment. The sale, which resulted in a material gain, was completed on February 2, 2022.3. Hallergan uses the straight-line method to determine depreciation on all of the company’s depreciable assets.4. On February 8, 2022, Hallergan completed negotiations with its bank for a $10,000,000 line of credit.5. Hallergan uses the first-in, first-out (FIFO) method to value inventory.Required:For each of the above items,…Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2021. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2021: Asset Cost Date Placed in Service Office furniture $ 230,000 02/03/2021 Machinery 1,576,000 07/22/2021 Used delivery truck* 56,000 08/17/2021 *Not considered a luxury automobile. During 2021, Karane was very successful (and had no §179 limitations) and decided to acquire more assets in 2022 to increase its production capacity. These are the assets acquired during 2022: Asset Cost Date Placed in Service Computers and information system $ 416,000 03/31/2022 Luxury auto* 84,000 05/26/2022 Assembly equipment 1,280,000 08/15/2022 Storage building 900,000 11/13/2022 *Used 100% for business purposes. Karane generated taxable income in 2022 of $1,752,500 for purposes of computing the §179 expense limitation. (Use MACRS Table…
- Bopha Ltd, a general construction company which is based in Limpopo, has a financial year end of 31 December. Bopha Ltd was in a process of constructing a new plant which was available for use on 1 January 2022. During the 2021 financial year, it withdrew its tractor loader, purchased on 1 January 2018 from normal construction operations, for the period 1 March 2021 to 30 June 2021 and used it in the construction of a new plant. This tractor loader had a carrying amount of 336 000 on 1 January 2021 and is depreciated at a rate 20% on straight line basis. The cost price of the new plant before capitalization is R1 200 000. Calculate the total cost of the new plant as at 31 December 2021. The new plant will be depreciated at 5% per annum on straight line basis when it becomes available for use. 1. R1 196 000 2. R1 140 000 3. R1 256 000 4. R1 200 000 5. R 840 000FMEL is a manufacturing company incorporated in accordance with the Mauritian Law. The company principal activity is to provide high quality of T-Shirt for the American and European market.For the year ended 31 Dec 2021, the draft income statement shows the following details:NOTES MUR MURTurnover 1 32,000,000Less: Cost of SalesOpening stock 2 1,000,000Purchase 3 24,000,000Add inward carriage 4 2,500,000Depreciation of machinery 5 1,000,000Closing stock 6 (1,500,000)Total cost of sales (27,000,000)Gross Loss 5,000,000Other incomeDividend 7 235,500Interest 8 50,000EXPENSESWages and salaries 9 975,000Rent 10 300,000Repairs 11 50,000Travelling expenses 12 125,000Legal and Professional Expenses 13 75,000Depreciation 14 70,000Interest 15 7,000Light and Heat 16 50,000Sundry Business Expenses 17 22,500Motor Vehicle Expenses 18 47,500Advertising Expenses 19 50,000 (1,772,000)Net profit before taxation 3,513,500Page 5 of 9NOTES1. Turnover has not taken into consideration the return of goods sold…Al-Buraimi Ceramics LLC on 1st January 2021 purchases 1000 tonnes of lime stones for OMR 500,000. It purchased another lot of 500 tonnes on 1st March 2021 for OMR 100,000. The company follows first in first out method of issuing inventories. On 31st August 2021, it consumed 400 tonnes for manufacturing of ceramics. Estimate the value of Lime stones on 30tt September 2021. a.OMR 100,000 b.OMR 500,000 c.OMR 700,000 d.OMR 400,000
- Hallergan Company produces car and truck batteries that it sells primarily to auto manufacturers. Dorothy Hawkins, the company’s controller, is preparing the financial statements for the year ended December 31, 2024. Hawkins asks for your advice concerning the following information that has not yet been included in the statements. The statements will be issued on February 28, 2025. Hallergan leases its facilities from the brother of the chief executive officer. On January 8, 2025, Hallergan entered into an agreement to sell a tract of land that it had been holding as an investment. The sale, which resulted in a material gain, was completed on February 2, 2025. Hallergan uses the straight-line method to determine depreciation on all of the company’s depreciable assets. On February 8, 2025, Hallergan completed negotiations with its bank for a $10,000,000 line of credit. Hallergan uses the first-in, first-out (FIFO) method to value inventory. Required: For each of the above items, discuss…Leonard Co. sells $600,000 (cost $480,000) of vehicles to a local car dealer, Carlson Inc. The vehicles were ready to go when the contract was signed on May 31, 2021 and title passed to Carlson at that date. Carlson was undergoing a significant renovation to its dealership at the time and as a result, Carlson requested that Leonard retain the vehicles at its warehouse until July 15, 2021. Payment was made in full on June 30, 2021. At what date can Leonard Co. recognize the revenue relating to the sale of the vehicles?ABC Company purchased a new printing machine on December 1 at an invoice price of P4,000,000 with terms 2/10, n/30. On December 15, Cabiao paid the required amount for the machine. The installation costs were P50,000 and the employees received training on how to use the machine, at a cost of P20,000. Before using the machine to print customers’ orders, a test was undertaken and the paper and ink cost P5,000. What amount should be capitalized as cost of the machine? A. 3,995,000 B. 3,970,000 C. 3,975,000 D. 4,075,000
- J. Mwakisha, a contractor, started business on 1 January 2018. Purchases and disposals of machines over the subsequent three years were as follows: Machine date of purchase cost date of disposal MA 1 1 January 2018 5,000,000 MB 2 1 July 2019 2,500,000 1 June 2020 MC 3 1 October 2020 7,000,000 The machines are depreciated on straight line basis using a rate of 20 per cent per annum. Required: For the years 2018, 2019 and 2020, calculate the depreciation attributable to each year using prorata or time basis.The main activity of Sean Morris Plc is to buy old motorcycles, which are sold after converting them into a saleable condition. On 30th September 2020, the end of the company’s financial year, Sean Morris Plc had the following vehicles that were at various stages in the process of being converted to be ready for sale. Motorcycle Purchase price Conversion costs incurred to date Expected further costs before the sale Expected selling price Costs incurred on bringing to present location £ £ £ £ £ Suzzuk 750 4,735 440 - 7,000 540 Kawasak 230 6,415 770 75 9,650 470 Benley 800 1,775 630 300 3,000 375 Yamhan 90 3,840 - 1,000 5,900 230 Notes: Expected selling expenses for each motorcycle are 4% of the expected selling price. A quarter of the conversion costs are related to materials, but 16% of the cost of materials used in the conversions are considered to be abnormal wastage, due to a poor quality…Angel Corp. uses different kinds of machines in its manufacturing process. The following information relates to the acquisition of machines that it has recorded in 2021.· Cash paid for equipment- P250,000· Cost of transporting machine - insurance and transport- P9,000· Labor cost of installation by expert fitter- P15,000· Labor cost of testing equipment- P12,000· Insurance cost for 2021- P4,500· Cost of training for personnel who will use the machine- P7,500· Cost of safety rails and platforms surrounding machine- P18,000· Cost of water devices to keep machine cool- P24,000· Cost of adjustments to machine during 2021 to make it operate more efficiently- P22,500 What is the cost of the machine? A. 358,000 B. 328,000 C. 350,500 D. 380,500