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Murdoch University Bus285 Technology & Accounting Processes Workshop Solutions Manual Session 10 Workhop Questions

This document contains workshop solutions for accounting technology and processes questions. It includes journal entries for depreciation, disposal, and impairment of non-current assets for two companies, Cupcake Ltd and Fox Ltd. Key events for Cupcake Ltd include scrapping fully depreciated machinery, selling a computer, and scrapping a truck. For Fox Ltd, it covers purchasing a machine, impairment loss, continued depreciation, and partial reversal of impairment loss.

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85 views2 pages

Murdoch University Bus285 Technology & Accounting Processes Workshop Solutions Manual Session 10 Workhop Questions

This document contains workshop solutions for accounting technology and processes questions. It includes journal entries for depreciation, disposal, and impairment of non-current assets for two companies, Cupcake Ltd and Fox Ltd. Key events for Cupcake Ltd include scrapping fully depreciated machinery, selling a computer, and scrapping a truck. For Fox Ltd, it covers purchasing a machine, impairment loss, continued depreciation, and partial reversal of impairment loss.

Uploaded by

Vivian Wong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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MURDOCH UNIVERSITY

BUS285 TECHNOLOGY & ACCOUNTING PROCESSES


WORKSHOP SOLUTIONS MANUAL
SESSION 10

WORKHOP QUESTIONS

PSA8.3
CupCake Ltd

2018 $ $
Jan 1 Accumulated Dep’n — Machinery 52,000
Machinery 52,000
(Scrapping machinery fully depr’d 31/12/15)

June 30 Depreciation Expense 3,500


Accumulated Dep’n — Computer 3,500
(Update depreciation $49,000 x 1/7 x 6/12)

June 30 Cash 31,000


Accumulated Depreciation — Computer 24,500
Gain on Disposal 6,500
Computer 49,000
(Sale of computer)
Calculation of disposal
Cost (1/1/15) $49,000
Accum. Dep’n — Equipment 24,500
[($49,000 x 1/7 x 3.5yrs)]
Carrying amount 24,500
Cash proceeds 31,000
Gain on disposal $6,500

Dec 31 Depreciation — Truck (purchased 1/1/14) 3,000


Accumulated Dep’n — Truck 3,000
([($27,000 – $3,000) x 1/8] update depr’n)

Dec 31 Accumulated Dep’n — Truck (5yrs) 15,000


Loss on Disposal 12,000
Truck 27,000
(Scrapping of truck after 5 years)
PSB8.5

Fox Ltd

Year ending 30 June

$ $
(a) 01/07/18 Machinery 85,000
Cash 85,000
(Purchase of machine)

30/6/19 Depreciation Expense — Machinery 10,000


Accumulated Depreciation — Machinery 10,000
(($85,000 – $5,000) ÷ 8)

(b) 30/6/19 Impairment Loss 14,000


Accumulated Impairment Loss — 14,000
Machinery
(Writedown of machine to recoverable amount)

Machine CV Recoverable Amt Adj


30/6/16 $75,000 $61,000 14,000

(c) 30/6/20 Depreciation Expense — Machinery 8,000


Accumulated Depreciation — Machinery 8,000
(Depreciation ($61,000 – $5000) ÷ 7yrs remaining)

(d) 30/6/20 Accumulated Impairment Loss — Machinery 12,000


Income — Impairment Loss Reversal 12,000
(Write-down of machine to recoverable amount)

Maximum reversal $85,000 – $20,000* = $65,000


*2 years of normal depreciation had the asset not
been impaired.
Machine CV Recoverable Amt Adj
30/6/20 $53,000** $70,000 $12,000
**$85,000 – $10,000 – $8,000 – $14,000 =
$53,000

The max reversal is to a carrying value of $65,000


Adjustment $53,000 – $65,000 = $12,000

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