Reference no: EM132469038
The following information is related to tangible noncurrent assets of Kuro Bhd as at 31 December 2017
|
|
Cost
RM'000
|
Accumulated Depreciation
RM'000
|
Carrying Amount
RM'000
|
|
Land
|
591
|
-
|
591
|
|
Buildings
|
300
|
80
|
220
|
|
Plant and equipment
|
1,613
|
458
|
1,155
|
|
Fixtures and fittings
|
390
|
140
|
250
|
|
|
2,994
|
678
|
2,316
|
During the year ended 31 December 2017 the following transactions occur and have not been included in the amounts above:
(i) An equipment was acquired on 30 June 2017 at a price of RM154,000. To enable the equipment to be used, it requires a special installation, that cost the company RM5,000. While handling the equipment in their premise before the installation process, a small damage was found and the company paid RM500 to repair it. The damage, however, did not affect the performance of the equipment.
(ii) On 1 May 201T,one of the existing ?xture in the company was installed with an extension that will increase the effectiveness of the ?xture's function. The company has been invoiced for the work amounted to RM40,000 and no payment has been made yet.
(iii) On 1 of July 2017, a new building is purchased at the purchase price of RM300,000. The building is acquired with the recommendation from a property agent that were paid RM4,500 to ?nd an appropriate building in a speci?c location about a month prior. An executive personnel has travelled to the location with the agent few times before the decision to buy is made and the cost amounted to RMSOO. All of these costs have been paid accordingly.
(iv) Depreciation is provided on all assets in use at the year end at the following rates: Buildings 2% per annum reducing balance
Plant and equipment 20% per annum straight line
Fixtures and ?ttings 25% per annum straight line
It is the policy of the company to charge depreciation based on the month a property, plant or
equipment is acquired or disposed. Required:
Question 1: Explain the concept of depreciation and how to determine its value.
Question 2: Explain how a company should apply choices of depreciation methods. Your explanation must be based on the Conceptual Frameworks.
Question 3: Show the journal entries for transactions (i) to (iv) above.
Question 4: Prepare a schedule showing the Property, Plant and Equipment in notes to the ?nancial statements of Statement of Financial Position as at 31 December 2017.