- 1 (Max. Marks: 30)
Barbari Ltd acquires a bus for a list price of $330,000 (GST inclusive) on
1.1.2005 by paying $260,000 and trading in an older bus which is on the books
at a historical cost of $250,000 & an accumulated depreciation of $190,000.
The new bus is expected to have a useful life of six years, after which it will be
donated to Red Cross.
On January 1 2007, the bus is revalued to $250,000 and its useful life is
reassessed: it is expected, at that date, to have a remaining useful life of five
On 1 July 2008, the bus is unexpectedly sold for $105,000
Provide journal entries in accordance with AASB 116 to record
- Purchase of new bus on 1 January 2005 Marks :10
- the revaluation on 1 January 2007 &Marks : 8
- the subsequent sale on 1 July 2008. Marks: 12
Note: Barbari Ltd used accelerated depreciation method. The accelerated
depreciation rate is 1.2 times the straight line rate. Barbari Ltd is registered for
Q.2 (Max Marks: 15)
Consider the following March transactions for Indoor Décor & Furnishing
March 3 Completed interior decoration job & received $2,900 from a
March 6 Purchased 120 sofas on credit for $28,800, plus freight in of
March 14 Sold 65 sofas to Ancora Hotels Ltd for $425 each on credit 1/10,
March 18 Offered consultancy services to a client for interior decoration
for a fee of $1,700 on credit.
March 21 Purchased 50 table lamps for $1,250 total
March 24 Ancora Hotels settled their account in full.
March 28 Sold 30 table lamps for cash, $875
March 31 Posted depreciation of $150 on plant & equipment. The physical
count of inventory recorded 54 sofas & 20 table lamps. Provided
for bad debt expenses for the month of March.
Record the above transactions for Indoor Décor & Furnishing Store. (Ignore
Note: Indoor Décor & Furnishing Store follows perpetual inventory system &
provides for bad debt expenses at 2% of credit sales.