Financial Accounting II Past Paper PDF - IAS 36 Impairment Loss

Fin Acc II FINANCIAL ACCOUNTING II FIAC200 & FINLA200 IMPAIRMENT LOSS: IAS 36 QUESTION 1: COST MODEL XX Ltd bought machinery on 1 January 2019 for R600 000. The depreciation is allocated u...

Fin Acc II FINANCIAL ACCOUNTING II FIAC200 & FINLA200 IMPAIRMENT LOSS: IAS 36 QUESTION 1: COST MODEL XX Ltd bought machinery on 1 January 2019 for R600 000. The depreciation is allocated using straight line method over 6 years to nil residual value. The machinery is measured using cost model. The recoverable amount was as follows: On 31 December 2019 R450 000 On 31 December 2020 R750 000 Required: Prepare the general journal of XX Ltd from the date of purchase of the machinery to 31 December 2021. Page 1 of 10 Fin Acc II QUESTION 2: REVALUATION MODEL: NET REPLACEMENT METHOD XX Ltd bought machinery on 1 January 2019 for R600 000. The depreciation is allocated using straight line method over 6 years to nil residual value. The machinery is measured using revaluation model, using net replacement value. The revaluation surplus is transferred gradually to retained earnings. The fair value was determined as follows: On 31 December 2019 R700 000 The recoverable amount was as follows: On 31 December 2020 R450 000 On 31 December 2021 R250 000 On 31 December 2022 R750 000 Required: Prepare the general journal of XX Ltd from the date of purchase of the machinery to 31 December 2022. Page 2 of 10 Fin Acc II QUESTION 3: REVALUATION MODEL: GROSS REPLACEMENT VALUE METHOD XX Ltd bought machinery on 1 January 2019 for R600 000. The depreciation is allocated using straight line method over 6 years to nil residual value. The machinery is measured using revaluation model, using gross replacement value method. The revaluation surplus is transferred gradually to retained earnings. The fair value was determined as follows: On 31 December 2019 R700 000 The recoverable amount was as follows: On 31 December 2020 R450 000 On 31 December 2021 R250 000 On 31 December 2022 R750 000 Required: Prepare the general journal of XX Ltd from the date of purchase of the machinery to 31 December 2022. Page 3 of 10 Fin Acc II QUESTION 4: REVALUATION MODEL: NET REPLACEMENT METHOD XX Ltd bought machinery on 1 January 2020 for R1 200 000. The depreciation is allocated using straight line method over 6 years to nil residual value. The machinery is measured using revaluation model, using net replacement value. The revaluation surplus is transferred gradually to retained earnings. The fair value was determined as follows: On 31 December 2020 R700 000 On 31 December 2024 R900 000 The recoverable amount was as follows: On 31 December 2021 R450 000 On 31 December 2022 R250 000 On 31 December 2023 R750 000 Required: Prepare the general journal of XX Ltd from the date of purchase of the machinery to 31 December 2024. Page 4 of 10 Fin Acc II QUESTION 5: REVALUATION MODEL: GROSS REPLACEMENT METHOD XX Ltd bought machinery on 1 January 2020 for R1 200 000. The depreciation is allocated using straight line method over 6 years to nil residual value. The machinery is measured using revaluation model, using net replacement value. The revaluation surplus is transferred gradually to retained earnings. The fair value was determined as follows: On 31 December 2020 R700 000 On 31 December 2024 R900 000 The recoverable amount was as follows: On 31 December 2021 R450 000 On 31 December 2022 R250 000 On 31 December 2023 R750 000 Required: Prepare the general journal of XX Ltd from the date of purchase of the machinery to 31 December 2024. Page 5 of 10 Fin Acc II QUESTION 6: REVALUATION MODEL: NET REPLACEMENT METHOD XX Ltd bought machinery on 1 January 2020 for R1 200 000. The depreciation is allocated using straight line method over 6 years to nil residual value. The machinery is measured using revaluation model, using net replacement value. The revaluation surplus is transferred gradually to retained earnings. The fair value was determined as follows: On 31 December 2020 R700 000 On 31 December 2023 R900 000 The recoverable amount was as follows: On 31 December 2021 R450 000 On 31 December 2022 R800 000 Required: Prepare the general journal of XX Ltd from the date of purchase of the machinery to 31 December 2024. Page 6 of 10 Fin Acc II QUESTION 7: REVALUATION MODEL: GROSS REPLACEMENT VALUE METHOD XX Ltd bought machinery on 1 January 2020 for R1 200 000. The depreciation is allocated using straight line method over 6 years to nil residual value. The machinery is measured using revaluation model, using net replacement value. The revaluation surplus is transferred gradually to retained earnings. The fair value was determined as follows: On 31 December 2020 R700 000 On 31 December 2023 R900 000 The recoverable amount was as follows: On 31 December 2021 R450 000 On 31 December 2022 R800 000 Required: Prepare the general journal of XX Ltd from the date of purchase of the machinery to 31 December 2024. Page 7 of 10 Fin Acc II QUESTION 8: CASH GENERATING UNIT ZL Ltd is in a process of Manufacturing roof tiles. During the 2021 financial year, they have discovered that their cash generating unit might be impaired as a result of decrease in the demand of the tiles. They discovered that the recoverable amount of the CGU is R14 500 000. The following assets makes up the CGU Remaining Carrying amount Recoverable amounts useful life on 31/12/2021 Goodwill (purchased) unknown 1 500 000 unknown Equipment 8 years 8 000 000 9 300 000 Plant 4 years 7 500 000 Unknown Factory buildings 5 years 2 700 000 Unknown 20 000 000 14 500 000 All assets are measured using cost model However, it was discovered that the market might have picked up again in 2022. It was discovered that the recoverable amount should be R14 000 000 on 31 December 2022. Required: Prepare the general journals for year ended on 31 December 2021 and 31 December 2022. Page 8 of 10 Fin Acc II QUESTION 9: CASH GENERATING UNIT ZL Ltd is in a process of Manufacturing roof tiles. During the 2021 financial year, they have discovered that their cash generating unit might be impaired as a result of decrease in the demand of the tiles. They discovered that the recoverable amount of the CGU is R14 500 000. The following assets makes up the CGU Remaining Recoverable amounts Recoverable amounts useful life on On 31 December On 31 December 31/12/2021 2021 2022 Equipment 7 years Unknown Unknown Plant 3 years Unknown Unknown Factory buildings 5 years Unknown Unknown 14 500 000 20 450 000 However, it was discovered that the market might have picked up again in 2022. It was discovered that the recoverable amount should be R20 450 000 on 31 December 2022. Take note of the followings: ▪ Equipment is measured using cost model. The equipment was purchased on 1 January 2019 for R12 000 000. It was estimated that the useful life will be 10 years. It was determined that the recoverable amount of the plant was R9 000 000 on 31 December 2020. ▪ Plant is measured using revaluation model. The plant was purchased on 1 January 2019 for R9 000 000. The useful life was estimated to be 6 years to a nil residual value. The revaluation on plant was undertaken on 31 December 2019 and it was discovered that the fair value of the plant should be R11 225 000. ▪ Factory buildings were bought for R4 320 000 on 1 January 2019. The useful life was estimated to be 8 years at the date of purchase to a nil residual value. The factory buildings are measured using cost model. Required: Prepare the general journals for year ended on 31 December 2021 and 31 December 2022. Page 9 of 10 Fin Acc II QUESTION 10: CASH GENERATING UNIT ZL Ltd is in a process of Manufacturing roof tiles. During the 2021 financial year, they have discovered that their cash generating unit might be impaired as a result of decrease in the demand of the tiles. They discovered that the recoverable amount of the CGU is R14 500 000. The following assets makes up the CGU Remaining Recoverable amounts Recoverable amounts useful life on On 31 December On 31 December 31/12/2021 2021 2022 Equipment 7 years 8 000 000 7 500 000 Plant 3 years Unknown Unknown Factory buildings 5 years R2 600 000 Unknown 14 500 000 20 450 000 However, it was discovered that the market might have picked up again in 2022. It was discovered that the recoverable amount should be R20 4500 000 on 31 December 2022. Take note of the followings: ▪ Equipment is measured using cost model. The equipment was purchased on 1 January 2019 for R12 000 000. It was estimated that the useful life will be 10 years. It was determined that the recoverable amount of the plant was R9 000 000 on 31 December 2020. ▪ Plant is measured using revaluation model. The plant was purchased on 1 January 2019 for R9 000 000. The useful life was estimated to be 6 years to a nil residual value. The revaluation on plant was undertaken on 31 December 2019 and it was discovered that the fair value of the plant should be R11 225 000. Revaluation is transferred gradually to Retaining Earnings over the useful life of the plant. ▪ Factory buildings were bought for R4 320 000 on 1 January 2019. The useful life was estimated to be 8 years at the date of purchase to a nil residual value. The factory buildings are measured using cost model. Required: Prepare the general journals for year ended on 31 December 2021 and 31 December 2022. Page 10 of 10