Question Tag: Disposal
Search
500
+ past questions and counting.
- 2 Marks
ATAX – May 2019 – L3 – Q4a – Capital Gains Tax (CGT)
Define when acquisition or disposal is effective under the Capital Gains Tax Act.
Find Related Questions by Tags, levels, etc.
- Tags: Acquisition, Capital gains tax, CGT, Disposal, Tax law
- Level: Level 3
- Topic: Capital Gains Tax (CGT)
Report an error
- 14 Marks
AT – May 2018 – L3 – SB – Q3b – Capital Gains Tax
Calculate capital gains for asset disposal under hire purchase with specific instalment conditions.
Question
Alero Manufacturing Limited, Abeokuta, Ogun State, purchased a chargeable asset on hire purchase in year 2014. The deposit paid for the purchase was N800,000. The balance was to be paid in forty instalments of N75,000. The cash price of the asset was N2,400,000.
Required:
Calculate the capital gains, assuming the asset was sold as detailed below:
(i) For N4,200,000 after payment of thirty instalments. (7 Marks)
(ii) For N4,500,000 after payment of all the instalments. (7 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Capital gains tax, Disposal, Hire Purchase, instalment payments, Interest Element
- Level: Level 3
- Topic: Capital Gains Tax (CGT)
- Series: MAY 2018
Report an error
- 6 Marks
AT – May 2018 – L3 – SB – Q3a – Capital Gains Tax
Explain disposal under Capital Gains Tax Act, define incidental costs, and describe delayed remittance relief conditions.
Question
Capital gains may be defined as gains arising from increases in the market value of capital assets, to a corporate body or person who does not habitually offer them for sale, and in whose hands they do not constitute inventory-in-trade.
With respect to the Capital Gains Tax Act, you are required to explain:
(i) When a “disposal” is said to have taken place. (2 Marks)
(ii) What constitutes “incidental costs”? (2 Marks)
(iii) Under what circumstances can a “delayed remittance” relief be granted? (2 Marks)
Find Related Questions by Tags, levels, etc.
Report an error
- 5 Marks
AT – May 2018 – L3 – SB – Q2a – Taxation of Specialized Businesses
Differentiate between “disposal” and “disposed of,” and discuss intangible drilling costs and oil mining leases.
Question
“Disposal” or “disposed of” are terminologies used frequently in relation to chargeable oil owned by an oil-producing company under the provisions of the Petroleum Profits Tax Act Cap P.13 LFN 2004.
Required:
(i) Differentiate between “disposal” and “disposed of”. (2 Marks)
(ii) Discuss the following:
- Intangible drilling costs. (2 Marks)
- Oil mining lease. (1 Mark)
Find Related Questions by Tags, levels, etc.
Report an error
- 30 Marks
CR – Nov 2023 – L3 – SA – Q1 – Consolidated Financial Statements (IFRS 10)
Prepare a consolidated statement of financial position for Sports PLC Group, considering goodwill, non-controlling interests, impairments, and disposals.
Question
Sports PLC is a company which operates in the service sector. Sports PLC has a business relationship with Football PLC and Volleyball PLC. The financial positions of these companies as at September 30, 2020, are stated below:
| Item | Sports PLC | Football PLC | Volleyball PLC |
|---|---|---|---|
| Non-current assets: | N’m | N’m | N’m |
| Property, plants, and equipment | 1,840 | 600 | 620 |
| Investment in subsidiaries: | |||
| – Football PLC | 1,460 | – | – |
| – Volleyball PLC | 640 | – | – |
| Investment in Handball PLC | 96 | – | – |
| Intangible assets | 396 | 60 | 70 |
| Total Non-current assets | 3,792 | 1,300 | 690 |
| Current assets | 1,790 | 960 | 500 |
| Total assets | 5,582 | 2,260 | 1,190 |
Equity and liabilities
| Item | Sports PLC | Football PLC | Volleyball PLC |
|---|---|---|---|
| Ordinary share capital | 1,840 | 800 | 400 |
| Other components of equity | 146 | 74 | 50 |
| Retained earnings | 1,790 | 884 | 278 |
| Total equity | 3,776 | 1,758 | 728 |
| Non-current liabilities | 990 | 246 | 186 |
| Current liabilities | 816 | 256 | 276 |
| Total liabilities | 1,806 | 502 | 462 |
| Total equity and liabilities | 5,582 | 2,260 | 1,190 |
Additional Information
- Acquisition of Football PLC:
- On October 1, 2018, Sports PLC acquired 70% of the equity interest in Football PLC. The purchase consideration was cash of N1,460 million. At the acquisition date, the fair value of the non-controlling interests (NCI) in Football PLC was N590 million. The fair value of the identifiable net assets acquired was N1,670 million. Retained earnings of Football PLC were N638 million, and other components of equity were N54 million. The excess in fair value is due to non-depreciable land.
- Acquisition of Volleyball PLC:
- On October 1, 2019, Football PLC acquired 80% of the equity interest in Volleyball PLC for a cash consideration of N640 million. The fair value of the non-controlling interests for 20%, 30%, and 44% holdings was N144 million, N216 million, and N322 million, respectively. At the date of acquisition, the fair value of the identifiable net assets of Volleyball PLC was N724 million. Retained earnings were N212 million, and other components of equity were N40 million. The excess in fair value is due to non-depreciable land. The group’s policy is to measure the non-controlling interests at fair value at the acquisition date.
- Impairment Testing:
- As of September 30, 2020, both Football PLC and Volleyball PLC were tested for impairment. The recoverable amounts for Football PLC and Volleyball PLC were N2,850 million and N1,208 million, respectively. Directors determined that impairment was due to poor performance of intangible assets.
- Investment in Handball PLC:
- On October 1, 2018, Sports PLC acquired a 14% interest in Handball PLC for N36 million, classified as fair value through other comprehensive income (FVTOCI). On April 1, 2020, Sports PLC acquired an additional 16% interest for N54 million, achieving significant influence. The value of the original 14% investment on April 1, 2020, was N42 million. Handball PLC reported after-tax profits of N40 million for the year ending September 30, 2019, and N60 million for the year ending September 30, 2020. In September 2020, Sports PLC received a dividend of N4 million from Handball PLC, credited to other components of equity.
- Project Development Costs:
- Sports PLC purchased patents costing N20 million on October 1, 2019, to develop new products. An additional investigative cost of N14 million was incurred, and a working prototype was created at a cost of N8 million. Another N6 million was spent to prepare the product for sale, and marketing costs amounted to N4 million. All costs were included in intangible assets.
- Disposal Plan:
- Sports PLC intends to dispose of a major patent line. At the date the criteria for “held for sale” were met, the carrying amounts were:
- Property, Plant, and Equipment: N36 million
- Inventories: N98 million
- Current Liabilities (Trade Payables): N6 million
- Expected proceeds are N60 million. No adjustments have been made to the financial statements for this decision.
- Sports PLC intends to dispose of a major patent line. At the date the criteria for “held for sale” were met, the carrying amounts were:
Required: Prepare the consolidated statement of financial position for Sports PLC Group as of September 30, 2020. (30 Marks)
Find Related Questions by Tags, levels, etc.
Report an error
- 20 Marks
CR – Nov 2020 – L3 – Q1i – Consolidated Profit or Loss and OCI
Prepare a consolidated statement of profit or loss and other comprehensive income for a parent, foreign subsidiary, and associate, accounting for goodwill impairment, disposal, and foreign currency translation.
Question
Bolga Ltd is a limited liability company in Ghana, which has investments in a number of other companies. The draft statements of profit or loss for Bolga Ltd and its other investments for the year ended April 30, 2020, are given below:
| Bolga Ltd | Navrongo Ltd | Serrekunda Ltd | |
|---|---|---|---|
| Revenue | GH¢286,000 | GH¢136,000 | GMD840,000 |
| Cost of sales | (GH¢122,000) | (GH¢84,000) | (GMD504,000) |
| Gross profit | GH¢164,000 | GH¢52,000 | GMD336,000 |
| Distribution costs | (GH¢20,000) | (GH¢12,000) | (GMD56,000) |
| Administrative expenses | (GH¢46,000) | (GH¢20,000) | (GMD116,000) |
| Operating profit | GH¢98,000 | GH¢20,000 | GMD164,000 |
| Investment income | GH¢2,000 | GH¢4,000 | – |
| Finance costs | (GH¢4,000) | (GH¢8,000) | (GMD12,000) |
| Profit before tax | GH¢96,000 | GH¢16,000 | GMD152,000 |
| Income tax expenses | (GH¢22,000) | (GH¢4,000) | (GMD36,000) |
| Profit for the period | GH¢74,000 | GH¢12,000 | GMD116,000 |
Additional relevant information:
i) Bolga Ltd purchased 80% of Navrongo Ltd’s three million GH¢5 ordinary shares for GH¢12 million two years ago. At the acquisition date, the carrying value of Navrongo’s net assets was GH¢10 million, and this was deemed to be the same as their fair value. The non-controlling interest was measured using the proportion of net assets method. Goodwill on acquisition of Navrongo is not impaired. On 31 October 2019, Bolga Ltd sold one million, four hundred and forty thousand of its shares in Navrongo Ltd for GH¢13 million. The fair value of the interest retained was GH¢19 million. The retained earnings of Navrongo Ltd was GH¢5 million as at April 30, 2019. The only entry posted in Bolga Ltd’s individual financial statements was the GH¢13 million cash received. This was debited to the bank account and the credit posted to the suspense account.
ii) On 1 May 2019, Bolga Ltd acquired 60% of Serrekunda Ltd’s one million GMD1 ordinary shares for GMD284 million. Serrekunda is a Gambian-based company with Gambian Dalasi (GMD) as its currency. The non-controlling interest at acquisition was valued at GMD116 million using the fair value method. At 1 May 2019, the carrying amount of Serrekunda Ltd’s net assets was GMD240 million but the fair value was GMD280 million. The excess in the fair value was due to a brand with a remaining useful economic life of 5 years at the date of acquisition.
On 30 April 2020, it was determined that goodwill arising on the purchase of Serrekunda Ltd was impaired by GMD16 million. Goodwill impairments are charged as administrative expenses.
iii) On 28 February 2020, Navrongo Ltd paid a dividend of GH¢2 million to its ordinary shareholders.
iv) On 1 June 2019, Bolga Ltd started construction of a new building project and financed this out of its general borrowings. The construction was completed on 30 April 2020 at a total cost of GH¢20 million, excluding interest on borrowings. Bolga Ltd has had the following loans outstanding for the whole financial year:
- 10% bank loan: GH¢28,000
- 8% loan notes: GH¢12,000
All the interest for the year has been expensed to the statement of profit or loss. None of the loan notes are held by any other companies within Bolga Ltd.
v) On 1 November 2019, Bolga Ltd granted 20,000 share options to each of its 100 managers. These options will vest on 31 October 2021 if the managers are still employed. However, five managers had left the company by 30 April 2020, and it is expected that another five will leave by 31 October 2021. The fair value of the share options was GH¢3.10 on 1 November 2019, and GH¢10 on 30 April 2020. There have not been any accounting entries posted in relation to this scheme.
vi) The following exchange rates are relevant:
- GMD: GH¢1
- May 1 2019: 10.0
- April 30 2020: 8.0
- Average for the year ended 30 April 2020: 9.2
Required:
Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 30 April 2020.
Find Related Questions by Tags, levels, etc.
- Tags: Associate, Consolidation, Disposal, Fair Value, Foreign subsidiary, Goodwill, Profit or Loss
- Level: Level 3
Report an error
- 5 Marks
FR – May 2019 – L2 – Q4b – Property, Plant, and Equipment (IAS 16)
Explanation of revaluation of non-current assets and accounting treatment of revaluation surplus/deficit and gains/losses on disposal.
Question
You are a senior accounting officer in Chidinma Ventures Plc. The chief accountant of the company has requested you to explain to some newly recruited trainee accountants, the requirements of IAS 16 as regards the revaluation of non-current assets and accounting treatment of surpluses and deficits on revaluation as well as gains and losses on disposal of assets.
Required:
Explain the transactions as required by the chief accountant.
Find Related Questions by Tags, levels, etc.
Report an error
- 10 Marks
FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16
This question requires calculating the gain or loss on disposal of a motor vehicle and preparing the necessary ledger accounts.
Question
Propati Limited has a fleet of cars that are used to distribute goods to the market. As at July 1, 2020, the cost of the cars was ₦750,000,000, and their accumulated depreciation was ₦30,500,000. On January 1, 2021, the company bought a new car for ₦2,800,000. One of the old cars, which was acquired 3 years ago at a cost of ₦1,000,000 with accumulated depreciation of ₦600,000, was accepted by the seller in part exchange at a value of ₦480,000. The reporting date of Propati Limited is December 31, and the entity charges depreciation using the straight-line method.
Required:
i. Calculate the gain or loss on disposal of the old car. (2 Marks)
ii. Prepare the following ledger accounts in respect of the transactions:
- Disposal of motor vehicle account (2 Marks)
- Motor vehicles account (4 Marks)
- Accumulated depreciation account (2 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Accumulated Depreciation, Disposal, Gain or Loss, Ledger Accounts, Motor Vehicles
- Level: Level 1
Report an error
- 1 Marks
FA – Nov 2023 – L1 – SA – Q17 – Accounting for Property, Plant, and Equipment (IAS 16)
Describe the treatment of asset and accumulated depreciation accounts upon disposal.
Question
When a non-current asset is disposed of, what is the typical situation regarding the asset account and the accumulated depreciation account in the general ledger?
- A. Both the asset account and the accumulated depreciation account will be closed to zero
- B. The asset account will have a closing balance, but the accumulated depreciation account will be closed to zero
- C. The asset account will be closed to zero, but the accumulated depreciation account will have a closing balance
- D. Both the asset account and the accumulated depreciation account will have closing balances to carry forward
- E. Neither the asset account nor the accumulated depreciation account will have a zero closing balance
Find Related Questions by Tags, levels, etc.
Report an error
- 2 Marks
ATAX – May 2019 – L3 – Q4a – Capital Gains Tax (CGT)
Define when acquisition or disposal is effective under the Capital Gains Tax Act.
Find Related Questions by Tags, levels, etc.
- Tags: Acquisition, Capital gains tax, CGT, Disposal, Tax law
- Level: Level 3
- Topic: Capital Gains Tax (CGT)
Report an error
- 14 Marks
AT – May 2018 – L3 – SB – Q3b – Capital Gains Tax
Calculate capital gains for asset disposal under hire purchase with specific instalment conditions.
Question
Alero Manufacturing Limited, Abeokuta, Ogun State, purchased a chargeable asset on hire purchase in year 2014. The deposit paid for the purchase was N800,000. The balance was to be paid in forty instalments of N75,000. The cash price of the asset was N2,400,000.
Required:
Calculate the capital gains, assuming the asset was sold as detailed below:
(i) For N4,200,000 after payment of thirty instalments. (7 Marks)
(ii) For N4,500,000 after payment of all the instalments. (7 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Capital gains tax, Disposal, Hire Purchase, instalment payments, Interest Element
- Level: Level 3
- Topic: Capital Gains Tax (CGT)
- Series: MAY 2018
Report an error
- 6 Marks
AT – May 2018 – L3 – SB – Q3a – Capital Gains Tax
Explain disposal under Capital Gains Tax Act, define incidental costs, and describe delayed remittance relief conditions.
Question
Capital gains may be defined as gains arising from increases in the market value of capital assets, to a corporate body or person who does not habitually offer them for sale, and in whose hands they do not constitute inventory-in-trade.
With respect to the Capital Gains Tax Act, you are required to explain:
(i) When a “disposal” is said to have taken place. (2 Marks)
(ii) What constitutes “incidental costs”? (2 Marks)
(iii) Under what circumstances can a “delayed remittance” relief be granted? (2 Marks)
Find Related Questions by Tags, levels, etc.
Report an error
- 5 Marks
AT – May 2018 – L3 – SB – Q2a – Taxation of Specialized Businesses
Differentiate between “disposal” and “disposed of,” and discuss intangible drilling costs and oil mining leases.
Question
“Disposal” or “disposed of” are terminologies used frequently in relation to chargeable oil owned by an oil-producing company under the provisions of the Petroleum Profits Tax Act Cap P.13 LFN 2004.
Required:
(i) Differentiate between “disposal” and “disposed of”. (2 Marks)
(ii) Discuss the following:
- Intangible drilling costs. (2 Marks)
- Oil mining lease. (1 Mark)
Find Related Questions by Tags, levels, etc.
Report an error
- 30 Marks
CR – Nov 2023 – L3 – SA – Q1 – Consolidated Financial Statements (IFRS 10)
Prepare a consolidated statement of financial position for Sports PLC Group, considering goodwill, non-controlling interests, impairments, and disposals.
Question
Sports PLC is a company which operates in the service sector. Sports PLC has a business relationship with Football PLC and Volleyball PLC. The financial positions of these companies as at September 30, 2020, are stated below:
| Item | Sports PLC | Football PLC | Volleyball PLC |
|---|---|---|---|
| Non-current assets: | N’m | N’m | N’m |
| Property, plants, and equipment | 1,840 | 600 | 620 |
| Investment in subsidiaries: | |||
| – Football PLC | 1,460 | – | – |
| – Volleyball PLC | 640 | – | – |
| Investment in Handball PLC | 96 | – | – |
| Intangible assets | 396 | 60 | 70 |
| Total Non-current assets | 3,792 | 1,300 | 690 |
| Current assets | 1,790 | 960 | 500 |
| Total assets | 5,582 | 2,260 | 1,190 |
Equity and liabilities
| Item | Sports PLC | Football PLC | Volleyball PLC |
|---|---|---|---|
| Ordinary share capital | 1,840 | 800 | 400 |
| Other components of equity | 146 | 74 | 50 |
| Retained earnings | 1,790 | 884 | 278 |
| Total equity | 3,776 | 1,758 | 728 |
| Non-current liabilities | 990 | 246 | 186 |
| Current liabilities | 816 | 256 | 276 |
| Total liabilities | 1,806 | 502 | 462 |
| Total equity and liabilities | 5,582 | 2,260 | 1,190 |
Additional Information
- Acquisition of Football PLC:
- On October 1, 2018, Sports PLC acquired 70% of the equity interest in Football PLC. The purchase consideration was cash of N1,460 million. At the acquisition date, the fair value of the non-controlling interests (NCI) in Football PLC was N590 million. The fair value of the identifiable net assets acquired was N1,670 million. Retained earnings of Football PLC were N638 million, and other components of equity were N54 million. The excess in fair value is due to non-depreciable land.
- Acquisition of Volleyball PLC:
- On October 1, 2019, Football PLC acquired 80% of the equity interest in Volleyball PLC for a cash consideration of N640 million. The fair value of the non-controlling interests for 20%, 30%, and 44% holdings was N144 million, N216 million, and N322 million, respectively. At the date of acquisition, the fair value of the identifiable net assets of Volleyball PLC was N724 million. Retained earnings were N212 million, and other components of equity were N40 million. The excess in fair value is due to non-depreciable land. The group’s policy is to measure the non-controlling interests at fair value at the acquisition date.
- Impairment Testing:
- As of September 30, 2020, both Football PLC and Volleyball PLC were tested for impairment. The recoverable amounts for Football PLC and Volleyball PLC were N2,850 million and N1,208 million, respectively. Directors determined that impairment was due to poor performance of intangible assets.
- Investment in Handball PLC:
- On October 1, 2018, Sports PLC acquired a 14% interest in Handball PLC for N36 million, classified as fair value through other comprehensive income (FVTOCI). On April 1, 2020, Sports PLC acquired an additional 16% interest for N54 million, achieving significant influence. The value of the original 14% investment on April 1, 2020, was N42 million. Handball PLC reported after-tax profits of N40 million for the year ending September 30, 2019, and N60 million for the year ending September 30, 2020. In September 2020, Sports PLC received a dividend of N4 million from Handball PLC, credited to other components of equity.
- Project Development Costs:
- Sports PLC purchased patents costing N20 million on October 1, 2019, to develop new products. An additional investigative cost of N14 million was incurred, and a working prototype was created at a cost of N8 million. Another N6 million was spent to prepare the product for sale, and marketing costs amounted to N4 million. All costs were included in intangible assets.
- Disposal Plan:
- Sports PLC intends to dispose of a major patent line. At the date the criteria for “held for sale” were met, the carrying amounts were:
- Property, Plant, and Equipment: N36 million
- Inventories: N98 million
- Current Liabilities (Trade Payables): N6 million
- Expected proceeds are N60 million. No adjustments have been made to the financial statements for this decision.
- Sports PLC intends to dispose of a major patent line. At the date the criteria for “held for sale” were met, the carrying amounts were:
Required: Prepare the consolidated statement of financial position for Sports PLC Group as of September 30, 2020. (30 Marks)
Find Related Questions by Tags, levels, etc.
Report an error
- 20 Marks
CR – Nov 2020 – L3 – Q1i – Consolidated Profit or Loss and OCI
Prepare a consolidated statement of profit or loss and other comprehensive income for a parent, foreign subsidiary, and associate, accounting for goodwill impairment, disposal, and foreign currency translation.
Question
Bolga Ltd is a limited liability company in Ghana, which has investments in a number of other companies. The draft statements of profit or loss for Bolga Ltd and its other investments for the year ended April 30, 2020, are given below:
| Bolga Ltd | Navrongo Ltd | Serrekunda Ltd | |
|---|---|---|---|
| Revenue | GH¢286,000 | GH¢136,000 | GMD840,000 |
| Cost of sales | (GH¢122,000) | (GH¢84,000) | (GMD504,000) |
| Gross profit | GH¢164,000 | GH¢52,000 | GMD336,000 |
| Distribution costs | (GH¢20,000) | (GH¢12,000) | (GMD56,000) |
| Administrative expenses | (GH¢46,000) | (GH¢20,000) | (GMD116,000) |
| Operating profit | GH¢98,000 | GH¢20,000 | GMD164,000 |
| Investment income | GH¢2,000 | GH¢4,000 | – |
| Finance costs | (GH¢4,000) | (GH¢8,000) | (GMD12,000) |
| Profit before tax | GH¢96,000 | GH¢16,000 | GMD152,000 |
| Income tax expenses | (GH¢22,000) | (GH¢4,000) | (GMD36,000) |
| Profit for the period | GH¢74,000 | GH¢12,000 | GMD116,000 |
Additional relevant information:
i) Bolga Ltd purchased 80% of Navrongo Ltd’s three million GH¢5 ordinary shares for GH¢12 million two years ago. At the acquisition date, the carrying value of Navrongo’s net assets was GH¢10 million, and this was deemed to be the same as their fair value. The non-controlling interest was measured using the proportion of net assets method. Goodwill on acquisition of Navrongo is not impaired. On 31 October 2019, Bolga Ltd sold one million, four hundred and forty thousand of its shares in Navrongo Ltd for GH¢13 million. The fair value of the interest retained was GH¢19 million. The retained earnings of Navrongo Ltd was GH¢5 million as at April 30, 2019. The only entry posted in Bolga Ltd’s individual financial statements was the GH¢13 million cash received. This was debited to the bank account and the credit posted to the suspense account.
ii) On 1 May 2019, Bolga Ltd acquired 60% of Serrekunda Ltd’s one million GMD1 ordinary shares for GMD284 million. Serrekunda is a Gambian-based company with Gambian Dalasi (GMD) as its currency. The non-controlling interest at acquisition was valued at GMD116 million using the fair value method. At 1 May 2019, the carrying amount of Serrekunda Ltd’s net assets was GMD240 million but the fair value was GMD280 million. The excess in the fair value was due to a brand with a remaining useful economic life of 5 years at the date of acquisition.
On 30 April 2020, it was determined that goodwill arising on the purchase of Serrekunda Ltd was impaired by GMD16 million. Goodwill impairments are charged as administrative expenses.
iii) On 28 February 2020, Navrongo Ltd paid a dividend of GH¢2 million to its ordinary shareholders.
iv) On 1 June 2019, Bolga Ltd started construction of a new building project and financed this out of its general borrowings. The construction was completed on 30 April 2020 at a total cost of GH¢20 million, excluding interest on borrowings. Bolga Ltd has had the following loans outstanding for the whole financial year:
- 10% bank loan: GH¢28,000
- 8% loan notes: GH¢12,000
All the interest for the year has been expensed to the statement of profit or loss. None of the loan notes are held by any other companies within Bolga Ltd.
v) On 1 November 2019, Bolga Ltd granted 20,000 share options to each of its 100 managers. These options will vest on 31 October 2021 if the managers are still employed. However, five managers had left the company by 30 April 2020, and it is expected that another five will leave by 31 October 2021. The fair value of the share options was GH¢3.10 on 1 November 2019, and GH¢10 on 30 April 2020. There have not been any accounting entries posted in relation to this scheme.
vi) The following exchange rates are relevant:
- GMD: GH¢1
- May 1 2019: 10.0
- April 30 2020: 8.0
- Average for the year ended 30 April 2020: 9.2
Required:
Prepare the consolidated statement of profit or loss and other comprehensive income for the year ended 30 April 2020.
Find Related Questions by Tags, levels, etc.
- Tags: Associate, Consolidation, Disposal, Fair Value, Foreign subsidiary, Goodwill, Profit or Loss
- Level: Level 3
Report an error
- 5 Marks
FR – May 2019 – L2 – Q4b – Property, Plant, and Equipment (IAS 16)
Explanation of revaluation of non-current assets and accounting treatment of revaluation surplus/deficit and gains/losses on disposal.
Question
You are a senior accounting officer in Chidinma Ventures Plc. The chief accountant of the company has requested you to explain to some newly recruited trainee accountants, the requirements of IAS 16 as regards the revaluation of non-current assets and accounting treatment of surpluses and deficits on revaluation as well as gains and losses on disposal of assets.
Required:
Explain the transactions as required by the chief accountant.
Find Related Questions by Tags, levels, etc.
Report an error
- 10 Marks
FA – Nov 2022 – L1 – SB – Q6b – Accounting for Property, Plant, and Equipment (PPE) in Accordance with IAS 16
This question requires calculating the gain or loss on disposal of a motor vehicle and preparing the necessary ledger accounts.
Question
Propati Limited has a fleet of cars that are used to distribute goods to the market. As at July 1, 2020, the cost of the cars was ₦750,000,000, and their accumulated depreciation was ₦30,500,000. On January 1, 2021, the company bought a new car for ₦2,800,000. One of the old cars, which was acquired 3 years ago at a cost of ₦1,000,000 with accumulated depreciation of ₦600,000, was accepted by the seller in part exchange at a value of ₦480,000. The reporting date of Propati Limited is December 31, and the entity charges depreciation using the straight-line method.
Required:
i. Calculate the gain or loss on disposal of the old car. (2 Marks)
ii. Prepare the following ledger accounts in respect of the transactions:
- Disposal of motor vehicle account (2 Marks)
- Motor vehicles account (4 Marks)
- Accumulated depreciation account (2 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Accumulated Depreciation, Disposal, Gain or Loss, Ledger Accounts, Motor Vehicles
- Level: Level 1
Report an error
- 1 Marks
FA – Nov 2023 – L1 – SA – Q17 – Accounting for Property, Plant, and Equipment (IAS 16)
Describe the treatment of asset and accumulated depreciation accounts upon disposal.
Question
When a non-current asset is disposed of, what is the typical situation regarding the asset account and the accumulated depreciation account in the general ledger?
- A. Both the asset account and the accumulated depreciation account will be closed to zero
- B. The asset account will have a closing balance, but the accumulated depreciation account will be closed to zero
- C. The asset account will be closed to zero, but the accumulated depreciation account will have a closing balance
- D. Both the asset account and the accumulated depreciation account will have closing balances to carry forward
- E. Neither the asset account nor the accumulated depreciation account will have a zero closing balance
Find Related Questions by Tags, levels, etc.
Report an error