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    Case Study Chapter 4 - Ias 16

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    1. The document provides 4 case studies involving accounting for property, plant, and equipment using different depreciation methods and revaluation models. 2. The first case study requires calculating depreciation expense over 5 years using straight-line, sum of years digits, diminishing balance, and units of production methods. 3. The second case study involves recording journal entries for equipment from 2011-2015 using straight-line depreciation and later switching to the revaluation model. 4. The third case study involves changing the basis of equipment from cost to revaluation model and preparing journal entries from 2014-2015. 5. The fourth case study involves revaluing land measured at fair value

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    Case Study Chapter 4 - Ias 16

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    Thị Thanh Viên Cao
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    1. The document provides 4 case studies involving accounting for property, plant, and equipment using different depreciation methods and revaluation models. 2. The first case study requires calculating depreciation expense over 5 years using straight-line, sum of years digits, diminishing balance, and units of production methods. 3. The second case study involves recording journal entries for equipment from 2011-2015 using straight-line depreciation and later switching to the revaluation model. 4. The third case study involves changing the basis of equipment from cost to revaluation model and preparing journal entries from 2014-2015. 5. The fourth case study involves revaluing land measured at fair value

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    1. The document provides 4 case studies involving accounting for property, plant, and equipment using different depreciation methods and revaluation models. 2. The first case study requires calculating depreciation expense over 5 years using straight-line, sum of years digits, diminishing balance, and units of production methods. 3. The second case study involves recording journal entries for equipment from 2011-2015 using straight-line depreciation and later switching to the revaluation model. 4. The third case study involves changing the basis of equipment from cost to revaluation model and preparing journal entries from 2014-2015. 5. The fourth case study involves revaluing land measured at fair value

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    40 views3 pages

    Case Study Chapter 4 - Ias 16

    Uploaded by

    Thị Thanh Viên Cao
    1. The document provides 4 case studies involving accounting for property, plant, and equipment using different depreciation methods and revaluation models. 2. The first case study requires calculating depreciation expense over 5 years using straight-line, sum of years digits, diminishing balance, and units of production methods. 3. The second case study involves recording journal entries for equipment from 2011-2015 using straight-line depreciation and later switching to the revaluation model. 4. The third case study involves changing the basis of equipment from cost to revaluation model and preparing journal entries from 2014-2015. 5. The fourth case study involves revaluing land measured at fair value

    Copyright:

    © All Rights Reserved
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    of 3

    CASE STUDY CHAPTER 4 - IAS 16

    Case study 1: On January 01, 01, entity E acquires a machine for $152,000 that is
    available for use on the same day. Payment is effected in cash on the same day. The
    residual value of the machine is $2,000. Estimated usful life is 5 years. The expected and
    actual use of the machine in the years 01–03 is 15,000 hours (=4,000 hours in year 01 +
    3,500 hours in year 02 + 3,000 hours in year 03 + 2,500 hours in year 04 + 2,000 hours in
    year 05).

    Required : Determine the depreciation expense in E’s financial statements as on Dec 31


    for the 5 years by using:
    1. The straight-line method

    2. The sum of years digits method.

    3. The diminishing balance method with rate = 40%

    4. The units of production method

    Case study 2 : In the 01 January 2011, Sonner Ltd acquired the equipment A by
    $502,000. Estimated useful life is 10 years, estimated residual value is $2,000. Company
    uses straight-line method for depreciation. From 2014, Sonner Ltd measure the
    equipment by the revaluation model. At 30 June 2014, equipment A was revalued to $
    400,000. After one year, at 30 June 2015, equipment A was revalued to $200,000.

    Required : Prepare the journal entries from 01 January 2011 to 30 June 2015. (using both
    method for revaluation)

    Case study 3:

    In the 30 June 2014 annual report of Sonner Ltd, the equipment was reported as follows:

    Equipment (at cost) $ 500,000

    Accumulated Depreciation. (150,000)

    350,000
    The equipment consisted of two machines, Machine A and Machine B. Machine A had
    cost $300,000 and had a carrying amount of $180,000 at 30 June 2014, and Machine B
    had cost $200,000 and was carried at $170,000. Both machines are measured using the
    cost model, and depreciated on a straight-line basis over a 10-year period.

    On 31 December 2014, the directors of Sonner Ltd decided to change the basis of
    measuring the equipment from the cost model to the revaluation model. Machine A was
    revalued to $180,000 with an expected useful life of 6 years, and Machine B was
    revalued to $155,000 with an expected useful life of 5 years.

    At 30 June 2015, Machine A was assessed to have a fair value of $163,000 with an
    expected useful life of 5 years, and Machine B’s fair value was $136,500 with an
    expected useful life of 4 years. Ignore tax.

    Required: Prepare the journal entries during the period 1 July 2014 to 30 June 2015 in
    relation to the equipment.

    Case study 4:

    On Jan 01, 01, entity E acquires land for CU 40. Payment is effected in cash on the same
    day. The piece of land is measured according to the revaluation model after recognition.
    Revaluations are carried out on an annual basis. Fair value of the land changes as follows:

    Required

    Dec 31, 01 44
    Dec 31, 02 36
    Dec 31, 03 48

    Prepare any necessary entries in E’s financial statements as on Dec 31 for the years 01–
    03. Ignore deferred tax.

    Question 5: In the 30 June 2014 annual report of Sonner Ltd, the equipment A was
    reported as follows:

    Equipment A (at cost) $ 500 000


    Accumulated Depreciation (150 000)
    350 000
    Estimated useful life 10 years
    Sonner Ltd measure the equipment by the revaluation model. At 30 June 2014,
    Equipment A was revalued to $ 400,000.
    Required : Prepare the journal entries to revalue the equipment A.

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