Compute the charge to the profit and loss account

Assignment Help Accounting Basics
Reference no: EM13954476

C & R plc is a large company which operates a number of retail stores throughout the United Kingdom. The company makes up financial statements to 30 September each year.

On 1 October 1996 the company purchased two plots of land at two different locations, and commenced the construction of two retail stores. The construction was completed on 1 October 1997.

Details of the costs incurred to construct the stores are as follows:

 

Location A £000

Location B £000

Cost of land

500

700

Cost of building materials

500

550

Direct labour

100

150

Site overheads

100

100

Fixtures and fittings

200

200

The construction of the stores was financed out of the proceeds of issue of a £10 million zero coupon bond on 1 October 1996. The bond is redeemable at a price of £25 937 000 on 30 September 2006. This represents the one and only payment to the holders of the bond.

Both stores were brought into use on 1 October 1997. The store at Location A was used by C & R plc but, due to a change of plan, the store at Location B was let to another retailer at a commercial rent.

It is the policy of C & R plc to depreciate freehold properties over their anticipated useful life of 50 years, and to depreciate fixtures and fittings over 10 years. The cost of such proper- ties (including fixtures and fittings) should include finance costs, where this is permitted by the regulatory framework in the United Kingdom.

Requirements

(a) Compute the amounts which will be included in fixed assets in respect of the stores at Locations A and B on 30 September 1997. Give full explanations for the amounts you have included.

(b) Compute the charge to the profit and loss account for depreciation on the fixed assets at the two locations for the year to 30 September 1998, stating clearly the reasons for your answers.

Reference no: EM13954476

Questions Cloud

Which reaction illustrates fusion : The half-life of Rn-222 is 3.823 day. What was the original mass of a sample of this isotope if 0.0500 g remains after 7.646 day?
Theory address organization change : or the Unit VII Research Paper, you will use the outline from Unit I and research located in Unit IV to create a final paper. As part of the body of your paper, you will address the following points:
What is a balanced scorecard and how are companies using it : What is a "balanced scorecard" and how are companies using it? Answer the following question after reading the attach file. 200 words with references.
Population health and the environment : You are a healthcare professional who has researched the effects of environmental factors on population health. Because of your expertise in this field, you are presenting your findings at a global conference on environmental health issues. To pre..
Compute the charge to the profit and loss account : (a) Compute the amounts which will be included in fixed assets in respect of the stores at Locations A and B on 30 September 1997. Give full explanations for the amounts you have included. (b) Compute the charge to the profit and loss account for..
Compute measures of central tenancy and a dispersion : The price in dollars of a gallon of gasoline at the end of each month is recorded for one year.
Calculate the center of mass of a cone with mass m : Given a cone of height H and angle alpha with constant density. Calculate the center of mass using triple integrals in cylindrical coordinates. This requires a description of the solid in such coordinates and the use of the element of volume in th..
The value of a pint of juice not pasteurized : The company has determined that the sales value of 100 pounds of peels at the split-off point is $350, and the value of a pint of juice not pasteurized or bottled is $0.4. Beyond the split-off point, the cost of sugar-coating and packaging the 100..
Respect of the development for the year : On 1 January 1995, X Ltd borrowed £30 million to finance the project. The £30 million carries no interest but is repayable on 31 December 1997 at a premium of £9.93 million (i.e. £39.93 million is to be repaid in total). The superstore is to be br..

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determining firm core operating income

The firm also reports a currency translation gain of $8.9 million as part of other comprehensive income. Calculate the firm's core operating income (after tax) and core percentage profit margin. The firm's marginal tax rate is 39 percent.

  How are expenses and withdrawals similar and different

How are expenses and withdrawals similar, and how are they different? How do generally accepted accounting principles (GAAP) differ from the laws of mathematics?

  Assume payments were made at the end of each month into an

assume payments were made at the end of each month into an ordinary annuity earning interest at the rate of 8year

  Post beginning balances in ledger accounts (t-accounts)

Post beginning balances in ledger accounts (t-accounts) from the December 31, 2009 post-closing trial balance. Prepare journal entries to record each transaction for DeeDee's Designs. (A general journal is provided. Multiple pages will be needed.)

  Is it possible that measures on the customer internal

is it possible that measures on the customer internal operations and innovation and learning dimension could be

  What is the variable production cost per unit

Top Disc manufactures frisbees. The following information is available for 2013 , the company's first year in business when it produced 325,000 units. Revenue of $450,000 was generated by the sale of 180,000 frisbees.

  Calculate the retained earnings balance

Dividends declared and paid during Feb were $12,000. Calculate the retained earnings balance at Feb. 28. 2010.

  Components of audit risk

1. All of the following are components of audit risk except. Which of the following is true?

  How much of home office expense

How much of home office expense can he deduct in 2014?

  Show the necessary entries in the books of wilz

Required: Show the necessary entries in the books of Wilz Ventures Plc.

  Outline the electronic product environment assessment

Outline the Electronic Product Environment Assessment for rating computer products.

  What are some typical types of transactions

What are some typical types of transactions that appear in the financing section of the statement of cash flows?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd