Olympic Limited is a diversified industrial company with many different areas of operation.
The following information relates to the company's property, plant and equipment. The company has a 30th September year end.
- All the plant was purchased and brought into use on 1 October 20X1 at a cost of C 800 000. The cost of testing the plant amounted to C 45 000 and samples manufactured while in the testing phase were sold for C 5 000. The useful life of the plant is estimated at five years and the residual value is estimated at C 40 000. At 30 September 20X4, similar items of plant of five years age are currently realising C 70 000. The production director, however, expects the entity to obtain C 100 000 on disposal. The entity applies the re-allocation method.
- The motor vehicle consists of a delivery van purchased on 1 October 20X3 at a cost of C 270 000. The useful life is estimated at four years and the residual value is estimated at CO. At 30 May 20X4, the tyres of the delivery van are replaced with tyres of a better quality. The new tyres cost C 24 000 and have an estimated useful life of two years. It is estimated that the original tyres cost C 12 000. Costs of servicing the delivery van during the year amounted to C 12 500.