(a)
(i) Freehold land and buildings
Ownership will be evidenced by purchase documents or other ‘documents of title’.
Ownership may also be evidenced by the payment of insurance premiums.
Payments should be traced through the cash records.

(ii) Computers
Both ownership and cost of computers will be shown in the purchase documentation and in the cash records.
The serial number of the computer will demonstrate ownership.
Any software licences attached to the computer illustrate ownership.
Insurance premiums paid show ownership.

(iii) Motor vehicles
Both ownership and cost of motor vehicles will be shown in the purchase documentation and in the cash records.
Motor vehicles normally have associated documentation that show tax payable.
Motor vehicle may be leased in which case the leasing documentation should be inspected.
Insurance premiums paid show ownership.

(b)
(i) Buildings – 2% on cost
This gives a useful economic life (‘UEL’) of buildings of 50 years. I believe this to be about right and hence the charge to the statement of comprehensive income for the depreciation of buildings is correct.

(ii) Office equipment – 20% on cost
Office equipment consists mainly of computers. The UEL of computers based on a 20% straight line depreciation rate is 5 years. This is far too long for computers. As a result, depreciation will be too low and hence the profit figure in the statement of comprehensive income will be too high.

(iii) Motor vehicles – 50% on cost
This will result in a UEL of motor vehicles of 2 years. This is too short. (The accepted UEL of motor vehicles is around 4 years). As a consequence, depreciation will be too high. Profit in the statement of comprehensive income will be too low.

(c)
A non-current asset register will contain details of:

• Cost of asset
• Supplier
• Date of purchase
• Manufacturer
• Model or type of asset
• Serial number
• Accumulated depreciation
• Net book value
• Current location
• Current contract and duration
• Vehicle repair history
• Insurance details

A non-current asset register is a memorandum ledger that provides details of all non-current assets. It should always be reconciled to the figure in the nominal ledger so as to ensure its accuracy.
It is useful for Prime Rentals, as any customer’s demands can immediately be accessed for availability, i.e. with respect to a particular model of vehicle that a customer desires to see if it is available. In addition, if that vehicle is not available, the non-current asset register will allow Prime Rentals to suggest an alternative (for example by altering model of vehicle or age of vehicle).

(d)
If you should choose to revalue your buildings, this is a change in accounting policy with relation to IAS 16 Property, Plant and Equipment. It represents a change from one permitted treatment to the allowable alternative treatment.
(The cost model treatment states that property, plant and equipment should be valued at cost less accumulated depreciation. The allowed alternative treatment states that property, plant and equipment may be carried at a revalued amount less any subsequent accumulated depreciation).
All assets within this same class of non-current asset should be revalued.
If the revalued amount model is adopted, two conditions must be complied with:

• Revaluations must subsequently be made with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value at the end of each reporting period.
• When an item of property, plant and equipment is revalued, the entire class of assets to which the item belongs must be revalued.

Upon revaluation:

• An increase in carrying amount should be credited to a revaluation reserve unless it reverses a previous decrease charged as an expense, it should be recognised as revenue.
• A decrease in carrying amount should be recognised as an expense, in which there is a revaluation surplus existing for the same asset, in which case, it should be charged against that surplus.
• Subsequent depreciation must be based on the revalued amount and remaining useful life.

Audit work on revaluation:
The valuer must be:

• Independent
• Qualified
• Experienced
• Relevant
  Check the arithmetic calculation of the revaluation.
  Check the depreciation both before and after the revaluation to the statement of comprehensive income.
  Check the inclusion of the revaluation reserve.