Tangible NCA Flashcards
Leclerc Co borrowed $2.4m to finance building of a factory. Construction expected to take 2 years. Loan was drawn down on 1/1/19 and work began on 1/3/19. $1m loan was not utilised until 1/7/19 so Leclerc was able to invest it until needed.
Leclerc co is paying 8% on loan and invest surplus fund at 6%
Calculate borrowing costs to be capitalised for year ended 31/12/19 in respect of this project.
Borrowing costs (from March to December) - $2.4m x 8% x 10/12 = $160,000 Less investment income (from March to June) - $1m x 6% x 4/12 = ($20,000)
= $140,000
Carter CO vacated its head office building and let it out to third party on 30/6/18. The building had an original cost of $900,000 on 1/1/10 and was being depreciated over 50 years. It was judged to have FV on 30/6/18 of $950,000. At year end 31/12/18 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 as at 31/12/18 in respect of this building?
Prior 30/6/18 building was classified as –> PPE IAS 16
Lease –> change in usage –> transferred to investment property IAS 40
IAS 40 –> assets must be transferred across at FV of the date of transfer; $950,000
Cost as at 1.1.10 - $900,000 Depreciation to 30.6.18 - $900,000/50 x (8+0.5) years = ($153,000) Carrying amount = $747,000 Fair value as at 30.6.18 - $950,000 Rev surplus (Bal. figure) - $203,000
D’s YE is 30/9/15. D commenced the dev stage of a project to produce a new pharmaceutical drug on 1/1/15. Exp of $40k per month was incurred until project was completed on 30/6/15 when the drug went into immediate production. The directors became confident of the project’s success on 1/3/15. The drug is expected to generate benefits for 5 yrs.
What is the CA of any intagible asset recognised in respect of the project & what is the total amount D will charge to P/L for YE 30/9/15?
capitalised as intangible asset - $40,000 x 4 = $160,000
(from March to June)
Amortisation of asset - $160,000/5 yrs x 3/12 = $8,000
CA of the asset as at 30/9/15 - $160k - $8k = $152k
(from June)
Expenses for Jan and Feb = 2 x $40k
= $80,000
Amortisation for the period = $8,000
Expenses taken to P/L - $80,000 + $8,000
= $88,000
