Revision: Property, Plant, and Equipment (PPE) Calculations

1. Revision

Prepared by
Ryspay Akmaral

2.

Problem 1: Initial Measurement of PPE An entity
purchased property for $6 million on 1 July
20X3. The land element of the purchase was
$1 million. The expected life of the building
was 50 years and its residual value nil,
straight-line method is used. What is the
depreciation charge for the year ended 30
June 20X5?

3.

Problem 2: An entity uses the revaluation model
for its property, plant, and equipment. The
carrying amount of an asset is revalued to its
fair value at the end of the reporting period.
Which of the following statements is correct?
A) Revaluations must be made with sufficient
regularity to ensure that the carrying amount
does not differ materially from the fair value at
each reporting date.
B) When an item of property, plant, and
equipment is revalued, there is no requirement
that the entire class of assets to which the item
belongs must be revalued.

4.

Problem 3: Banter Co purchased an office
building on 1 January 20X1. The building cost
was $1,600,000 and this was depreciated by the
straight-line method at 2% per year, assuming a
50-year life and nil residual value. The building
was re-valued to $2,250,000 on 1 January 20X6.
The useful life was not revised.
What is the balance on the revaluation surplus
account?

5.

Problem 4: The following items have been
identified during the preparation of a bank
reconciliation:
Unpresented cheques
Uncleared lodgements
Bank charges not yet recorded in the cash
book
Dishonoured cheque not yet recorded in the
cash book
Which of these items require an entry in the
cash book?

6.

Problem 5: A company's cash book shows a
balance of $2,000 overdrawn at 31 March 20X6.
The following items have been identified:
Bank charges of $100 have not been entered
in the cash book.
A cheque for $500 has been recorded in the
cash book but has not been presented for
payment.
A lodgement of $300 has been credited by
the bank but not yet recorded in the cash
book.
What is the adjusted cash book balance?

7.

Problem6:On 1 January 20X3 Tipton’s trade receiva
bles were $15,000. The following relates to the year
ended 31
December 20X3:
$
Credit sales
180,000
Cash receipts
70,000
Contra with payables
35,000
Discounts made
9,000
Irrecoverable debt write offs
10,000
Increase in allowance
30,000
What was the value of receivables at 31 December
20X3?

8.

Problem 7: At 1 November 20X6, Ollie Co had the
following capital structure:
Ordinary shares of $0.50 each: $100,000
Share premium: $30,000
On 10 January 20X7, in order to raise finance for
expansion, there was a 1-for-4 rights issue at $1.20.
The issue was fully taken up.
What is the balance on Ollie Co's share premium
account after the above transaction?
A) $65,000
B) $60,000
C) $30,000
D) $35,000

9. Thank you for your active participation! This is the end of practice