Questions:
Question 1
Bell Ltd. exchanged a piece of equipment for land and also paid $10,000 cash. The equipment was acquired at a cost of $420,000 in previous years. At the date of exchange, the equipment has a carrying amount (net book value) of $295,000 and the land has a fair market value of $320,000.
Required:
Provide the entry that Bell Ltd. should record for this transaction.
Question 2
Box Ltd. exchanged a piece of equipment for land and also paid $30,000 cash. The equipment was acquired at a cost of $600,000 in previous years. At the date of exchange, the land has a fair market value of $420,000 and a $15,000 loss on disposal was to be recognized for the equipment.
Required:
Provide the entry that Box Ltd. should record for this exchange transaction.
Question 3
On 1 January 2014, T&T Ltd. purchased equipment for $630,000 cash. The equipment was depreciated using straight-line and had an estimated useful life of 8 years and an estimated residual value of $30,000. Effective from 1 January 2016, T&T revised the total useful life of the equipment to 7 years with an estimated residual value of $10,000.
Required:
a. Determine the carrying amount of the equipment at 1 January 2016.
b. Compute depreciation expense for year-ended 31 December 2016.
Question 4
A piece of freehold land was acquired for $500,000 cash on 1 January 2015. The land is not subject to depreciation and is revalued at each fiscal year-ending 31 December.
Details about the fair value at each year-end are as follows:
31.12.2015
$510,000
31.12.2016
$495,000
The land was sold on 1 August 2017 for $503,000 cash.
Required:
Prepare all relevant entries relating to the land for 2015 to 2017. Indicate the date next to each entry.
Question 5
A piece of freehold land was acquired for $700,000 cash on 10 July 2015. The land is not subject to depreciation and is revalued at each fiscal year-ending 31 December. Details about the fair value at each year-end are given below:
31.12. 2015 Fair value$670,000
31.12. 2016 Fair value$710,000
The land was sold on 15 April 2017 for $725,000 cash.
Required:
Prepare all relevant entries relating to the land for 2015 to 2017. Indicate the date next to each entry.