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  • Solution To Tutorial 2 - AN2103

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    This document outlines the components that can be included in calculating the cost of various assets according to accounting standards. It provides examples of costs that make up the total cost of a machine, telecommunication network, and manufacturing facility. Allowable costs include purchase price, import duties, delivery and transport, installation, and commissions. Capitalizable costs for a plant include contractors' costs, direct materials and labor, engineering overheads, and interest during construction. The document also demonstrates the accounting entries to record these asset costs on the statement of financial position and statement of comprehensive income.

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    Solution to Tutorial 2_AN2103

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    This document outlines the components that can be included in calculating the cost of various assets according to accounting standards. It provides examples of costs that make up the total cost of a machine, telecommunication network, and manufacturing facility. Allowable costs include purchase price, import duties, delivery and transport, installation, and commissions. Capitalizable costs for a plant include contractors' costs, direct materials and labor, engineering overheads, and interest during construction. The document also demonstrates the accounting entries to record these asset costs on the statement of financial position and statement of comprehensive income.

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    13 views2 pages

    Solution To Tutorial 2 - AN2103

    Uploaded by

    labasayung
    This document outlines the components that can be included in calculating the cost of various assets according to accounting standards. It provides examples of costs that make up the total cost of a machine, telecommunication network, and manufacturing facility. Allowable costs include purchase price, import duties, delivery and transport, installation, and commissions. Capitalizable costs for a plant include contractors' costs, direct materials and labor, engineering overheads, and interest during construction. The document also demonstrates the accounting entries to record these asset costs on the statement of financial position and statement of comprehensive income.

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    © All Rights Reserved
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    of 2

    AN 2103 FAR 1

    Semester 1 2014/2015
    Solution to Tutorial 2
    1.

    The component costs that can be included are:


    Purchase price
    Less: 1% cash discount (irrespective of whether the discount is
    taken)

    297,000
    15,000
    2,500
    11,500
    326,000

    Import duties and taxes


    Delivery and transport costs
    Installation and commissioning costs
    Cost of the machine
    2.

    The component costs that can be capitalized are :


    RM000
    Contractors costs
    Direct materials and labour used
    Less : Cost inefficiencies
    Engineering and technical overheads
    Interest cost
    Cost of the plant

    3.

    RM
    300,000
    (3,000)

    RM000
    10,500

    8,500
    (1,500)
    7,000
    2,500
    2,000
    22,000

    The components that shall be included in the cost are :


    Costs of site preparation
    Telecommunication machinery and equipment
    Initial delivery and handling costs
    Commissioning, installation and assembly costs
    Cost of testing the network
    Directly attributable professional fees
    Decommissioning costs [ 50/(1.08)^10]
    Cost of telecommunication network

    RM000
    50,000
    300,000
    10,000
    40,000
    5,000
    15,000
    23,160
    443,160

    4.(a)
    Purchase price 1,200,000 x 90%
    Shipping
    Installation (82,000-12,000)
    Pre-production testing
    Dismantling costs (15,000 x0.75)
    Initial cost of machinery

    RM
    1,080,000
    16,000
    70,000
    25,000
    11,250
    1,202,250

    (b) SOCI
    Depreciation (1202250-26000)/5
    Finance cost (11,250 x 6%)

    RM
    235,250
    675

    (c) SOFP
    Property plant and equipment
    Accumulated depreciation
    Non-current liabilities:
    Provision for dismantling and restoration 11,250 + 675

    RM
    1,202,250
    (235,250)
    967,000
    11,925

    5.
    Land
    Purchase price
    Demolition and removal of old building
    Clearing and grading
    Stamp duty and legal fees
    Total cost of land

    RM1,200,000
    80,000
    150,000
    42,000
    RM1,472,000

    Building
    Architects fees
    Construction costs
    Total cost of building

    RM 50,000
    3,250,000
    RM3,300,000

    Machinery
    Purchase price
    Trade discount (5% x 860,000)
    Freight charges
    Special platforms and wire installation
    Cost of trial runs
    Total cost of machinery

    RM860,000
    (43,000)
    32,000
    12,000
    7,000
    RM868,000

    Forklifts
    PV = RM16,000+[70,000 (1+ 7%)1] = RM81,421

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