Assignment –

1. A business owns a building which it has been using as a head office. Company policy is to use the fair value model for valuing their property.

The building had an original cost on 1 January 20X0 of \$250,000 and was being depreciated over 50 years. At 31 December 20X9 its fair value was judged to be \$350,000.

How this will appear in the f at 31 December 20X9?

1. Ali Co acquired a property on 1 January 20X1 for \$250,000 being \$4200,000 for the building and \$50,000 for the land. This building was judged to have a useful life of 50 years. On 1 January 20×6, the property was independently valued, which resulted in an increase of \$100,000 to the carrying amount of the building and \$50,000 to the carrying amount of the land. The useful life is unchanged.

What is the depreciation charge for the year ended 31 December 20×6?

A. \$5,520

B. \$6,222

C. \$6,273

D. \$6,818

1. Y Co purchased a machine on 1 July 20×7 for \$500,000. It is being depreciated on a straight line basis over its expected life of ten years. Residual value is estimated at \$20,000. On 1st January 20×8, following a change in legislation, Y Cofitted a safety guard to the machine. The safety guard cost \$25,000 and has a useful life of five years with no residual value.

What amount will be charged to profit or loss for the year ended 31 March 20×8 in respect of depreciation on this machine?

A. \$38,750

B. \$37,250

C. \$41,000

D. \$39,750

Sample Solution