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Determine the amount that should be debited to the machinery

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Reference no: EM132941334

Question 1 - On 2 January 2021, Johnston Ltd purchased a machine with a list price of $234 300 and credit terms of 2/10, n/30. Payment was made within the discount period. Freight costs of $5400 and installation costs of $5280 were also paid. The machine has a useful life of 4 years and a residual value at the end of its useful life of $24 000. Ignore GST.

(a) Determine the amount that should be debited to the machinery account and prepare general journal entry to record the purchase, assuming a financial year ending 31 December.

(b) Determine the amount of depreciation expense for each of the 4 years ending 31 December assuming use of the straight-line depreciation method

(c) Prepare journal entry to record depreciation expense for the year ending 31 December 2021 under the straight-line depreciation method.

Question 2 - On 3 January 2017, Bennetti Ltd paid $33 000 for a machine with a useful life of 10 years and a residual value of $3000. On 31 December 2021, accumulated depreciation on the machine was $15 000. The machine was sold on 31 May 2022. Ignore GST.

(a) Prepare general journal entry to record depreciation on the machine for the five months in 2022. Use the straight-line depreciation method

(b) Prepare entry to record the sale of the machine on 31 May 2022 assuming a selling price of:

i. $16 000

ii. $17 800.

Question 3 - Sage Ltd is considering the purchase of Rosemary Ltd, which produces a product that Sage Ltd uses in its manufacturing process. Relevant data for Rosemary Ltd are as follows.

Fair value of identifiable assets $1,800,000

Fair value of identifiable liabilities $720,000

(a) Determine the price Sage Ltd would pay for goodwill in acquiring Rosemary Ltd if the total consideration transferred in the business combination was $1 500 000, in cash.

(b) Prepare entries for Sage Ltd in general journal form to record the acquisition of Rosemary Ltd for $1 000 000 cash.

Question 4 - Download Woolworths' latest annual report available at the link below and answer the following questions:

A) Are non-current assets a significant part of Woolworths' assets? Which assets are classified in this category?

B) Based on the notes, discuss the company's non-current assets (you may want to focus on the main components of PPE as well as the accounting policies applicable to this component of assets).

C) Comment the links between the segment reporting available in the notes and non-current assets?

Reference no: EM132941334

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