Question :
(i) Briefly explain the organization you are working for one in which you are familiar with.
What is likely to be the most important class of property, plant or equipment of this organization?
Illustrate and describe briefly three components that comprise the cost of an item or property, plant or equipment of this organization?
For each component, list individual cost items that could be included for the assets mentioned above.
(ii) Madon Capital Pte Ltd. acquired a new office lease for 3 years and spent $100,000 on renovation for a new lease premise, At the end of the 3 -year lease, Madon can have to reinstate the premises. The evaluated cost of restoration is $50,000.Based on the company's discount t=rate, the present value for the restoration cost is $37,566.
Determine the cost of the office and illustrate the journal entries to record the costs.
(b) An entity may adopt as its accounting policy for the treatment of its property, plant and equipment either a cost model or revaluation model.
(i) Differentiate the two approaches to treat revaluation of a property, equipment and plant. If the assists carrying amount is increased as a result of revaluation, state where this increase should be credited.
(ii) Consider that the cost of vechicle is $120,000 with an accumulated depreciation of $40,000.The revalued amiunt for similar class of vehicles is now $100,000.Illustrate the revaluation effect for the vehicle under the restatement approach.