Essay About June 2013Dr Interest Expense And Dr Depreciation Expense

Acct 7102 – Exam – luorizhidian
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Suggested solutions to the sample mid-semester exam paperQuestion 1(a) PVMLPWhen discount rate=12%, PVMLP = FV. Calculations provided below.         Periodic lease payments: 315 000 x 3.6048 =         1 135 512Bargain purchase option: 280 000 x 0.5674 =        + 158 872Fair value at lease inception                                   = 1 294 384Note: We eliminate the executory costs from the lease payment.As the amount of the minimum lease payments discounted at 12% equates to the fair value of the asset at lease inception, the interest rate implicit in the lease is 12%.(b) 1 July 2012Dr Leased asset                 1 294 384Cr         Lease liability                         1 294 38430 June 2013Dr Interest expense                 155 326Dr Lease liability                     159 674Dr Executory costs                  35 000Cr         Cash                                         350 000(155 326 = 1 294 384 x 0.12)Dr Depreciation expense         180 731Cr         Accumulated depreciation  180 731$180 731 = (1 294 384 – 210 000)/6Assume ownership will pass due to bargain purchase option, therefore depreciate over the economic life of the asset, not the lease term. Also, note that only a salvage value is taken into account when calculating the depreciation charge. Guaranteed residual values (and bargain purchase options) are ignored because there is uncertainty about whether they are an accurate reflection of the salvage value of the leased asset. (c) 30 June 2013Dr Executory expenses          35 000Dr Lease expense                 315 000Cr Cash                                       350 000To record lease payment for 201330 June 2014Dr Executory expenses         35 000Dr Lease expense                 315 000Cr Cash                                 350 000To record lease payment for 2014Question 2PART A1 July 2012Machinery (at cost of acquisition)  1,200,000Cash at bank                1,200,00030 June 2013Depreciation expense      200,000    ($1,200,000/6 years)

Accumulated depreciation     200,000No fair value as at 30 June 2001 given – indicates that a revaluation is not required.30 June 2014Depreciation expense   200,000   ($1,200,000/6 years)Accumulated depreciation   200,000Carrying amount $800,000 > $640,000 fair value. Asset is not impaired since value in use is$810,000Accumulated depreciation   400,000 ($200,000 x 2 years)Machinery               400,000Write back accumulated depreciation – net method30 June 2014Revaluation expense 160,000 ($640,000 – $800,000)Machinery       160,000.PART B1 July 2012Machinery (at cost of acquisition) 1,200,000Cash at bank                  1,200,00030 June 2013Depreciation expense        200,000 ($1,200,000/6 years)Accumulated depreciation        200,00030 June 2014Depreciation expense        200,000 ($1,200,000/6 years)Accumulated depreciation        200,000Carrying amount ($1,200,000 – $400,000) > $640,000 value in useImpairment loss    160,000 ($640,000 – $800,000)Accumulated impairment loss   160,00030 June 2015Depreciation expense   160,000 ($640,000/4 years)Accumulated depreciation    160,000Carrying amount ($640,000 – $160,000) > $480,000Assume that indicators of impairment reversal exist at 30 June 2015Recoverable amount (given)                 $610,000 > ceilingCeiling: Cost $1,200,000 – ($200,000 x 3 years) $600,000Less Carrying amount                      $480,000Maximum reversal                         $120,000Accumulated impairment loss   120,000Reversal of Impairment loss      120,000Note accounting depreciation 30 June 2016 will be $600,000/3years

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“Acct 7102” EssaysForStudent.com. 09 2015. 2015. 09 2015 < "Acct 7102." EssaysForStudent.com. EssaysForStudent.com, 09 2015. Web. 09 2015. < "Acct 7102." EssaysForStudent.com. 09, 2015. Accessed 09, 2015. Essay Preview By: luorizhidian Submitted: September 19, 2015 Essay Length: 2,803 Words / 12 Pages Paper type: Exam Views: 356 Report this essay Tweet Related Essays Acct 3000 - Guest Speaker Summary Shane Carey April 1, 2013 ACCT 3000 (Evening) Guest Speaker Summary During last week’s class meeting, we were fortunate enough to have a guest speaker 292 Words  |  2 Pages Acct 5432 – Metcash Group Assignment ACCT 5432 – metcash group assignment Valuation methods used for current assets and non-current assets: Current Assets 1. Cash and cash equivalents (NOTE 7) 2. 1,267 Words  |  6 Pages Get Access to 89,000+ Essays and Term Papers Join 209,000+ Other Students High Quality Essays and Documents Sign up © 2008–2020 EssaysForStudent.comFree Essays, Book Reports, Term Papers and Research Papers Essays Sign up Sign in Contact us Site Map Privacy Policy Terms of Service Facebook Twitter