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Accounting for Bus Revaluation and Sales

   

Added on  2019-11-20

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Student’s Name:ACCOUNTING ASSIGNMENT
Accounting for Bus Revaluation and Sales_1

Table of ContentsAnswer to Question 1............................................................................................................................2Part a.................................................................................................................................................2Part b)................................................................................................................................................3Part c.................................................................................................................................................3Answer to Question 2............................................................................................................................5References.............................................................................................................................................71 | P a g e
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Answer to Question 1This case study would help us to know the provisions relating to the AASB 116.Part aOn 1st January 2005 Barbari Ltd had purchased a new bus at a list price of $330,000 (Inclusive of GST). GST Rate in Australia during that period was 10%. Hence the base price at which the bus was purchased was $330,000/110% = $300,000. [ CITATION AAS17 \l 16393 ]This new bus was purchased by the company by paying $260,000 and the balance amount was paid in exchange of the old bus which they were having it. The historical cost of the old bus was $250,000 and the accumulated depreciation was $190,000. Hence the net value of the old bus was $250,000 - $190,000 = $60,000. This shows that the total amount paid by the company for the new bus was $260,000 + $60,000 = $320,000The journal entries which needs to be passed in this case as per AASB 116 is given below:Journal EntriesDrCrNew Bus a/c Dr$300,000GST a/c/ Dr$30,000 To Creditor a/c$330,000Journal EntriesDrCrCreditor a/c Dr$330,000Accumulated Depreciation a/c Dr$190,000 To Bank a/c$260,000 To Old Bus a/c$250,000 To Profit on exchange of asset$10,000Part b)2 | P a g e
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