Plant and Machinery

FR – L2 – Q53 – Financial Reporting Standards

Differentiate between current tax and deferred tax per IAS 12 for Talu Ghana Limited.

Question

Talu Ghana Limited owns the following property, plant and equipment as at 31 December 20X6.

	Cost	Accumulated Depreciation	Carrying Amount
	GHe’000	GHe’000	GHe’000
Plant & machinery	45,000	9,000	36,000
Land	25,000	–	25,000
Office buildings	75,000	15,000	60,000

Additional pieces of information are:
(i) Plant and machinery are depreciated on a straight-line basis over 5 years. The plant & machinery was acquired on 1 January 20X6.
(ii) Land is not depreciated
(iii) Buildings are depreciated on a straight-line basis over 25 years.
(iv) Depreciation on office building is not deductible for tax purposes but for the plant and machinery; tax deductible is granted over a period of 3 years in the ratio 50:30:20 percent of cost consecutively.
(v) The accounting profit before tax amounted to GH₵15,000,000 for the 20X7 financial year and GH₵20,000,000 for year 20X8. These figures include non-taxable revenue of GH₵4,000,000 in year 20X7 and GH₵5,000,000 in year 20X8.
(vi) Talu Nig. Ltd had a tax loss on 31 December 20X6 of GH₵12,500,000. The tax rate for year 20X6 was 35% and 30% for each of years 20X7 and 20X8.

Required:

(a) In accordance with IAS 12 on Income Taxes, differentiate between current tax and deferred tax.

(b). Prepare the deferred tax account for the year ended 31 December 20X8.

Answer

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Tags: Deferred Tax, IAS 12, Plant and Machinery, Tax Accounting, Tax Losses
Level: Level 2

Topic: Financial Reporting Standards and Their Applications

FA – L1 – Q27 – Non-current assets and depreciation

Explain the terms depreciation and useful life of a non-current asset for Kofi Ansah. List four factors/causes contributing to depreciation of a non-current asset.

Question

(A) Explain the following Terms:

(i) Depreciation.

(ii) Useful life of a non-current asset.

(B) There are four (4) factors/causes that contribute to depreciation of a Non-current asset. List these factors or causes.

(C).

Kofi Ansah is a trader who prepares accounts to 31st December each year. The following transactions with regard to assets have taken place:
(i) 3rd January, 20X7 purchased one office equipment (laptop) for GH¢2,000.
(ii) 5th July, 20X8 purchased plant and machinery costing GH¢50,000.
(iii) 1st December, 20X8 purchased plant and machinery for GH¢20,000.
(iv) 15th December, 20X9 bought office equipment (printer) for GH¢1,000.
Mr. Kofi maintains its non-current assets at cost and depreciates its assets at a constant rate of 20% using the straight-line method of providing for depreciation for all assets. Assets purchased attract full depreciation charge in the year of purchase, whilst any asset disposed of attracts no depreciation charge.

Required:
Prepare the following:
(i) Plant and machinery account.
(ii) Office equipment account.
(iii) Accumulated depreciation account.

Answer

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Tags: Depreciation, Financial accounting, Ledger accounts, Non-current Assets, Office equipment, Plant and Machinery, Straight-line Method
Level: Level 1

Topic: Non-current assets and depreciation

FA – L1 – Q21 – Non-current assets and depreciation

Prepare Tabori Construction’s plant and machinery accounts for 20X8-20X9, correcting a past error.

Question

Tabori Construction, a sole proprietorship, recognises depreciation on plant and machinery at 20% per annum reducing balance. On July 1, 20X8 the balances on the plant and machinery and accumulated depreciation accounts were GH₵712,000 and GH₵240,000 respectively. Depreciation is recognised from the month of purchase. During 20X8-20X9, the auditors discovered that a repair which cost GH₵25,000 and incurred on October 1, 20X6 had been capitalised incorrectly. It was decided to correct this mistake while finalising the accounts for the year ended June 30, 20X9. Only one machine was purchased during the year ended June 30, 20X9 costing GH₵60,000. The machine was received in the factory on October 1, 20X8 and was installed on January 1, 20X9.

Required
Prepare the plant and machinery account and accumulated depreciation account for the year ended June 30, 20X9. (Show all workings)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Correction of Errors, Depreciation, Non-current Assets, Plant and Machinery, Reducing Balance Method
Level: Level 1

Topic: Non-current assets and depreciation

Tag (SQ): Plant and Machinery

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FR – L2 – Q53 – Financial Reporting Standards

Differentiate between current tax and deferred tax per IAS 12 for Talu Ghana Limited.

FA – L1 – Q27 – Non-current assets and depreciation

Explain the terms depreciation and useful life of a non-current asset for Kofi Ansah. List four factors/causes contributing to depreciation of a non-current asset.

FA – L1 – Q21 – Non-current assets and depreciation

Prepare Tabori Construction’s plant and machinery accounts for 20X8-20X9, correcting a past error.

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FR – L2 – Q53 – Financial Reporting Standards

Differentiate between current tax and deferred tax per IAS 12 for Talu Ghana Limited.

You're reporting an error for "FR – L2 – Q53 – Financial Reporting Standards"

FA – L1 – Q27 – Non-current assets and depreciation

Explain the terms depreciation and useful life of a non-current asset for Kofi Ansah. List four factors/causes contributing to depreciation of a non-current asset.

You're reporting an error for "FA – L1 – Q27 – Non-current assets and depreciation"

FA – L1 – Q21 – Non-current assets and depreciation

Prepare Tabori Construction’s plant and machinery accounts for 20X8-20X9, correcting a past error.

You're reporting an error for "FA – L1 – Q21 – Non-current assets and depreciation"

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