FR - Ch-2 (Tangible Non Current Assets)

What will be the total amount capitalised in respect of the factory?

• $6,112,000

• $6,950,000

• $7,112,000

• $7,100,000

Carriageways Co had the following bank loans outstanding during the whole of 20X8 which form the company's general borrowings for the year:

$m

9% loan repayable 20X9 15

11% loan repayable 20Y2 24

Carriageways Co began construction of a qualifying asset on 1 April 20X8 and withdrew funds of $6 million on that date to fund construction. On 1 August 20X8 an additional $2 million was withdrawn for the same purpose.

Calculate the borrowing costs which can be capitalised in respect of this project for the year ended 31 December 20X8.

• $549,333

• $411,999

• $750,000

• $350,000

Leclerc Co has borrowed $2.4 million to finance the building of a factory. Construction is expected to take two years. The loan was drawn down on 1 January 20X9 and work began on 1 March 20X9. $1 million of the loan was not utilised until 1 July 20X9 so Leclerc was able to invest it until needed.

Leclerc Co is paying 8% on the loan and can invest surplus funds at 6%.

Calculate the borrowing costs to be capitalised for the year ended 31 December 20X9 in respect of this project.

• $140,000

• $192,000

• $100,000

• $162,000

Which of the following would be recognised as an investment property under IAS 40 Investment Property in the consolidated financial statements of Build Co?

• A property intended for sale in the ordinary course of business

• A property being constructed for a customer

• A property held by Build Co as a right-of-use asset and leased out under a six-month lease

• A property owned by Build Co and leased out to a subsidiary

Fido Feed Ltd has the following loans in place throughout the year ended 31 December 20X8 which constitute its general borrowings for the period.

$m

10% bank loan 140

8% bank loan 200

On 1 July 20X8 $50 million was drawn down for construction of a qualifying asset which was completed during 20X9.

What amount should be capitalised as borrowing costs at 31 December 20X8 in respect of this asset?

• $5.6 million

• $2.8 million

• $4.4 million

• $2.2 million

Wetherby Co purchased a machine on 1 July 20X7 for $500,000. It is being depreciated on a straight-line basis over its useful life of ten years. Residual value is estimated at $20,000. On 1 January 20X8, following a change in legislation, Wetherby Co fitted 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 20X8 in respect of depreciation on this machine?

• Rs.36,250

• Rs.37,200

• Rs.37,000

• Rs.37,250

Auckland Co purchased a machine for $60,000 on 1 January 20X7 and assigned it a useful life of 15 years. On 31 March 20X9 it was revalued to $64,000 with no change in useful life.

What will be depreciation charge in relation to this machine in the financial statements of Auckland Co for the year ending 31 December 20X9

• Rs.4700

• Rs.4760

• Rs.4765

• Rs.4766

Carter Co vacated its head office building and let it out to a third party on 30 June 20X8. The building had an original cost of $900,000 on 1 January 20X0 and was being depreciated over 50 years. It was judged to have a fair value on 30 June 20X8 of $950,000. At the year-end date of 31 December 20X8 the fair value of the building was estimated at $1.2 million.

Carter Co uses the fair value model for investment property.

What amount will be shown in revaluation surplus at 31 December 20X8 in respect of this building?

• Rs.2,0300

• Rs.2,00,000

• Rs.2,03,000

• None of them

Which of the following conditions must be met in order to classify an asset as held for sale?

(i) The asset is expected to be sold within 12 months

(ii) The asset will definitely be sold

(iii) The asset is available for immediate sale in its present condition

(iv) The asset is due to be marketed in the next month

• (i), (ii) and (iii)

• (i), (iii) and (iv)

• (i) and (iii)

• (ii) and (iv)

On 1 January 20X5, Ness revalued its head office to $21m, creating a revaluation surplus of $7m.

At this date, the office had a 35 year remaining life. On 1 January 20X9, property prices crashed and the head office was revalued to $11m.

Ness makes an annual reserves transfer for excess depreciation.

What loss on revaluation will be taken to the statement of profit or loss at the date of the revaluation on 1 January 20X9?

• Nil

• $1,400,000

• $600,000

• $7,600,000