Tangible non-current assets

Activity 1
Norris purchased a new car from UK for $100,000 and requested to be sent by plane (cost $30,000)
instead of the normal way which cost $1,000. Additional costs are import duties $15,000, insurance for
the first year
$1,500, road tax $500 and other normal transportation expenses of $200.
Required:
Calculate the cost of the asset.

Activity 2 – Straight line method

Mead is a sole trader with a 31 December year-end. He purchased a car on 1 January at a cost of
$12,000. He estimates that its useful life is four years, after which he will trade it in for $2,400.
Required:
Calculate the annual depreciation charge using the straight line method.

Activity 3. – Reducing balance method

A trader purchased an item of plant for $1,000. The depreciation charge for each of the first five years
is to be calculated, assuming the depreciation rate on the reducing balance to be 20% p.a.
Required:
Calculate the depreciation rate to be used in calculating depreciation charge and the depreciation
charge for each of the 4 years
Activity 5

On 1 January 20X6, LTL Ltd purchased a machine for $120,000 to be used for 10 years. The residual value is estimated at
$20,000. The company is using the straight line method for calculating depreciation on such machinery.

Required

Calculate the revised depreciation charge after 3 years of usage if:

(a) The remaining useful life is re-estimated to be 5 years and residual value remains unchanged.

(b) The remaining useful life is re-estimated to be 5 years and the residual value to be $15,000.

Activity 6

On 1 January 20X6 Patsino acquired land at $1,000. The fair value for the next 4 years is as follows:

Carrying Revaluation Profit or

Value Reserve Loss

$ $

Cost 1/1/20X6 1,000

Increase

Fair Value 1/1/20X7 1,200 Decrease

Fair value 1/1/20X8 1,100 Decrease

Fair Value 1/1/20X9 900 Increase

Fair Value 1/1/20Y0 1,050

Required:

Explain how the revaluation differences are dealt with.

Activity 7

A company revalues its buildings and decides to incorporate the revaluation into the books of account.
The following information is relevant

(a) Extract from the statement of financial position at 31 December 20X6

Buildings:

Cost 1,500,000

Depreciation (450,000)

1,050,000

(b) Depreciation has been provided at 2% per annum on the straight line basis.

(c) The building is revalued at 30 June 20X7 at $1,380,000. There is no change in its
remaining estimated future life.

(d) The building is finally sold for $1,500,000 at 31 December 20X9.

Required:

Show the relevant extracts from the final accounts for the 3 years up to 31 December 20X9.

The disclosure requirement of IAS 16

Activity 8

On 1 January 20X6, Anthony had the following non-current assets:

Land Buildings Plant and Equipment

Cost $120,000 $260,000 $840,000

Accumulated Depreciation - $ 56,000 $336,000

Carrying Value $120,000 $204,000 $504,000

During the year the following movements in non-current assets occurred:

Plant & Equipment

Additions 63,000

Cost of assets disposed 112,000

Depreciation of assets disposed 56,000

Depreciation Charge for the year 140,000

On 1 January the value of land is revised to $160,000 and the value of the buildings to $462,000. The
residual value was estimated to be $14,000 and the remaining useful life 70 years.

Required:

Prepare the disclosure note as per IAS 16 (ignore the note describing the accounting policy) using the
following format.