Advance Financial Accounting Assessment - Desklib

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HA3011
ADVANCED FINANCIAL ACCOUNTING
SUPPLEMENTARY ASSESSMENT
TRIMESTER 2, 2021
TIME ALLOWED: 4 Hours
All answers must be submitted within this time frame. Late submissions are not
accepted.
Assessment Weight: 50 total marks
Instructions:
 All questions must be answered by using the answer boxes provided in this paper.
 Completed answers must be submitted to Blackboard by the published due date
and time.
Submission instructions are at the end of this paper.
Purpose:
This assessment consists of six (6) questions and is designed to assess your level of
knowledge of the key topics covered in this unit
HA3011 Online Supp T2 2021

Question 1 (7 marks)
BMI Ltd acquired a Machine from BNS Ltd for the following consideration:
Cash $80 000, Land in the books of BMI Ltd the land is recorded at its cost of $950 000. It has a
fair value of $870 000.
BMI Ltd also agrees to assume the liability of BNS Ltd bank loan of $100 000 as part of the
Machine acquisition.
Required
(a) Calculate the acquisition cost of the Machine
(b) Provide the journal entries that would appear in BMI Ltd’s books to account for the
acquisition of the Machine
ANSWER: ** Answer box will enlarge as you type
A
Acquisition cost = 950000 + 100000 = 1050000
The book value of the machine is 950000 and the bank loan of BMI is also included as part of
machine acquisition so it will be included in cost of acquisition.
B
Machine a/c Dr 1050000
To cash 80000
To bank loan liability 100000
To BNS ltd 870000
(being machinery purchased and some part of cash is being paid along with taking the liability of
BNS as well in cost of machine.)
It is assumed that the balancing figure is being created as liability which is 870000
Question 2 (7 marks)
An item of depreciable machinery is acquired on 1 July 2015 for $320 000. It is expected to have
a useful life of 10 years and a zero-residual value (straight-line). On 1 July 2019, it is decided to
revalue the asset to its fair value of $280 000.
Required:
a) Provide journal entries to account for the revaluation (4 marks)
HA3011 Online Supp T2 2021

b) In your own words, what actions must be taken, if an item of plant, property and
equipment is measured at cost, but the recoverable amount of the assets is determined
to be less than cost? (3 marks)
ANSWER:
A
Machinery A/c dr 88000
To revaluation a/c 88000
(being revaluation of machinery being recorded within the books of account.)
B
In case when the recoverable amount of the asset is determined to be less than the cost, then
the company must revalue the asset. This is particularly because of the reason that when the
equipment is measured at cost then it is necessary for the company that they must try to
improve the value of asset. The reason underlying this fact is that when the cost of machine will
be good then the recoverable amount should also be good.
HA3011 Online Supp T2 2021