AS Industries has on January 1st20x1 purchased a new production facility - a factory building. You are given the following information about the building:
- Cost - 10 million NOK
- Economic life - 10 years
- Depreciation - Linear
- Residual value - 0
During fall 20x5 the company made some improvements of the factory premises. The expenses were amounted to 5,000,000 NOK. The work was carried out and the new premises were adopted 01.01.20x6. The improvements did not affect the building's total lifetime.
Question a:
Calculate the following for the years 20x1 - 20x10:
- Balance per 1 January and 31 December
- Annual depreciation
Question b:
How is the solution if the expenditure extends the lifetime of the building for three years?
In 20x1 AS Otta bought a lot for 3 million NOK. The lot was designed for use in the business and should be considered by the Accounting Act general principles. You are given the following information about the value development of the loy:
Value lot:
01.01.20x1 (buy): 3.0 million NOK
31.12.20x2: 1.8 million NOK
31.12.20x5: 2.6 million NOK
31.12.20x6: 3.5 million NOK
The value decrease in 20x2 were considered permanent.
Question:
Show the treatment of the lot in the income statement (result accounting) and balance sheet for the period 20x1 - 20X6.