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URD101
MGT401 solution No 1 fall 2011 Idea Solution
Question 1 Solution
Expenses related to the import of the plant 1,620,000 Site preparation 4,900,000 Operating losses before commercial production 400,000 Cost of test run & special staff training 730,000 Misc. Administrative Expenses 75,000 Interest paid to the vendor for deferred credit 200,000 Compensation by the vendor for capacity default 900,000 Estimated dismantling and other costs 1,150,000 Cost of damaged instruments 150,000 |
Here is the solution
Calculate the 25 % discount on invoice value
25/100*30000000 = 7500000
Less the discount from the invoice value..
30000000-7500000 = 22500000
Add following items for the cost
Expenses related to the import of the plant 1,620,000
Site preparation 4,900,000
Cost of test run & special staff training 730,000
Interest paid to the vendor for deferred credit 200,000
Estimated dismantling and other costs 1,150,000
Cost of damaged instruments 150,000
That makes it = 4340000
Now less following items
Compensation by the vendor for capacity default 900,000
4340000-900000
That makes it 3440000
Add 22500000
22500000 + 3440000
The final cost that will be take is 25940000
Don’t add operating losses and miscellaneous expenses because they are not directly related to the cost of asset,, and don’t less them.. they are irrelevant,,, just leave them,,,
For the reference…. See the IAS 16, Property Plant and equipment,,, page number 19. topic is “components of cost”
. At 31st December, 2010 the inventory in hand was as follows: Items |
Quantity (Units) |
Cost per UnitRs. (000) |
NRV per Unit Rs. (000) |
| Sofa Set | |||
100 |
85 |
98 |
|
| Dinning Table | |||
150 |
120 |
105 |
|
| Bed | |||
200 |
150 |
180 |
|
| Dressing Table | |||
400 |
60 |
55 |
|
| Wardrobe | |||
450 |
75 |
70 |
for dining table and wardrobe cost is more than NRV,, they will be recorded at the NRV..and following adjusting entries will be passed for them,, ( debit the p/l account with the difference in value, ,, and credit the stock in trade account…
for dining table
P/l Account 15 Rs debit
Stock in trade 15 Rs Credit
For the wardrobe
PL account 5 Rs debit
Stock in trade 5 Rs credit
For dressing table,,
Pl account 5 debit
Stock in trade 5 credit
Final amount will be
85+105+150+55+70 = 465
For reference,, see the page number 57-59 on handouts,,, Ias 02 inventories
This is just idea solution ,,, dun copy it as it is,,, take the idea and make ur own solution please,,,
Tags: 1, 2011, Idea, MGT401, No, Solution, fall, solution
Replies to This Discussion
-
BS(CS)Permalink Reply by Nosheen on -
Rs
Purchase price 300,000,00
Less:
Trade (75,000,00)
Compensation by vendor (900,000)
216,000,00
Add:
Import expenses 1,620,000
Site preparation cost 4,900,000
Testing and 730,000
Interest paid to vendor 200,000
Dismantling 1150,000
Cost of damaged i 150,000
303,50000
-
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