Company Accounting - Question and Answer

Running head: COMPANY ACCOUNTING
Company Accounting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1COMPANY ACCOUNTING
Table of Contents
Question 1:.................................................................................................................................2
Question 2:.................................................................................................................................7
Requirement a:.......................................................................................................................7
Requirement b:.......................................................................................................................8
Bibliography:..............................................................................................................................9

2COMPANY ACCOUNTING
Question 1:
Date Particulars Debit (in $) Credit (in $)
01/01/201
8
Machine A Account.................................Dr
Machine B Account..................................Dr
To Cash Account
(Purchase of Machine A and Machine B for
cash)
4,000
10,000
14,000
30/06/201
8
Depreciation Account..............................Dr
To Machine A Account
To Machine B Account
(To record depreciation charge)
665
190
475
30/06/201
8
Profit and Loss Account...........................Dr
To Depreciation Account
(To record accounting for depreciation)
665
665
30/06/201
9
Depreciation Account..............................Dr
To Machine A Account
To Machine B Account
(To record depreciation charge)
1,330
380
950
30/06/201
9
Profit and Loss Account...........................Dr
To Depreciation Account
(To record accounting for depreciation)
1,330
1,330
30/06/201
9
Loss on Revaluation Account...................Dr
To Machine Account
(To record loss accounted on revaluation)
230
230

3COMPANY ACCOUNTING
30/06/201
9
Machine B Account..................................Dr
To Gain on Revaluation Account
(To record gain accounted on revaluation)
425
425
02/01/202
0
Repairs on Machine B Account................Dr
To Cash Account
(To record repairs carried out)
6,600
6,600
31/03/202
0
Depreciation Account..............................Dr
To Machine A Account
(To record depreciation charge)
95.31
95.31
31/03/202
0
Profit and Loss Account...........................Dr
To Depreciation Account
(To record accounting for depreciation)
95.31
95.31
31/03/202
0
Machine C Account..................................Dr
To Machine A Account
To Cash Account
To Installation and Transportation
Account
(To record purchase of Machine C)
6,495
2,800
3,600
95
31/03/202
0
Profit and Loss Account...........................Dr
To Loss on Sale of Machine A
Account
(To record accounting for loss)
819.67
819.67
30/06/202
0
Profit and Loss Account...........................Dr
To Machine C Account
819.67
177.97

4COMPANY ACCOUNTING
To Machine B Account
(To record charge for depreciation)
641.70
30/06/202
0
Profit and Loss Account...........................Dr
To Depreciation Account
(To record accounting for depreciation)
819.67
819.67
30/06/202
0
Loss on Revaluation Account...................Dr
To Machine B Account
(To record loss on revaluation)
420.80
420.80
30/06/202
0
Machine C Account..................................Dr
To Gain on Revaluation Account
(To record gain on revaluation)
182.97
182.97
Workings:
01.01.2018:
Cost of Machine A = $4,000
Cost of Machine B = $10,000
Salvage value of Machine A = $200
Salvage value of Machine B = $500
Useful life for Machine A and Machine B = 10 years
Depreciation = (Purchase value – Salvage value)/Number of years
Annual depreciation of Machine A = ($4,000 - $200)/10 = $380

5COMPANY ACCOUNTING
Depreciation of Machine B = ($10,000 - $500)/10 = $950
Value of Machine A as on 01/01/2018 = $4,000
Depreciation of Machine A as on 30/06/2018 = ($4,000 - $200) x 6/12 = $190
Value of Machine B as on 01/01/2018 = $10,000
Depreciation of Machine B as on 30/06/2018 = ($10,000 - $500) x 6/12 = $475
Value of Machine A as on 01/07/2018 = ($4,000 - $190) = $3,810
Depreciation of Machine A (01/07/2018 – 30/06/2019) = $380
Value of Machine A as on 30/06/2019 = $3,810 - $380 = $3,430
Value of Machine B as on 01/07/2018 = ($10,000 - $475) = $9,525
Depreciation of Machine B (01/07/2018 – 30/06/2019) = $950
Value of Machine B as on 30/06/2019 = $9,525 - $950 = $8,575
Fair value of Machine A = $3,200
Revaluation Loss on Machine A = $3,200 - $3,430 = ($230)
Fair value of Machine B = $9,000
Revaluation Gain on Machine B = $9,000 - $8,575 = $425
Value of Machine A as on 01/07/2019 = $3,200
Salvage value of Machine A = $150
Useful life of Machine A = 8 years
Depreciation of Machine A until 31/12/2019 = ($3,200 - $150)/8 = $190.63

6COMPANY ACCOUNTING
Value of Machine A as on 01/01/2020 = $3,200 - $190.63 = $3,009.38
Value of Machine B as on 01/07/2019 = $9,000
Salvage value of Machine B = $400
Useful life of Machine B = 8 years
Depreciation of Machine B until 31/12/2019 = ($9,000 - $400)/8 = $537.50
Value of Machine B as on 01/01/2020 = $9,000 - $537.50 = $8,462.50
Repairs expense of Machine B as on 02/01/2020 = $6,600
Value of Machine B = $8,462.50 + $6,600 = $15,062.50
Increase in useful life of Machine B = 3.5 years
Total useful life of Machine B = 8 + 3.5 = 11.5 years
Residual value of Machine B = $945
Annual depreciation of Machine B = ($15,062.50 - $945)/11.5 = $1,283.41
Depreciation of Machine B as on 30/06/2020 = $1,283.41 x 6/12 = $641.70
Value of Machine B as on 30/06/2020 = $15,062.50 - $641.70 = $14,420.80
Value of Machine A as on 02/01/2020 = $3,009.38
Depreciation of Machine A until 31/03/2020 = $3,009.38 x 3/12 = $95.31
Net value of Machine A = $3,009.38 - $95.31 = $2,914.06
Exchange of Machine C = $2,800
Loss on exchange = $2,914.06 - $2,800 = $114.06

7COMPANY ACCOUNTING
Value of Machine C as on 31/03/2020 = $6,495
Salvage value of Machine C = $800
Useful life of Machine C = 8 years
Annual depreciation of Machine C = ($6,495 - $800)/8 = $711.88
Depreciation of Machine C as on 30/06/2020 = $711.88 x 3/12 = $177.97
Value of Machine C as on 01/07/2020 = $6,495 - $177.97 = $6,317.03
Fair value of Machine C = $6,500
Revaluation gain on Machine C = $6,500 - $6,317.03 = $182.97
Depreciation of Machine B as on 30/06/2020 = $641.70
Fair value of Machine B = $14,000
Revaluation gain on Machine B = $14,000 - $14,420.80 = ($420.80)
Question 2:
Requirement a:
Serial Number Particulars Debit (in $) Credit (in
$)
1 Revaluation Account..............Dr
Impairment Account..................Dr
To Land Account
To Assets Account
12,200 ($51,200 - $39,000)
407,200
39,200
407,200

8COMPANY ACCOUNTING
Requirement b:
Serial Number Particulars Debit (in $) Credit (in
$)
1 Impairment Loss Account................Dr
To Plant and Equipment Account
16,000 (256,000 – 240,000)
16,000
The adjustments required could not be written down below fair value; however, it
could be carried at an amount higher than the fair value.
Workings:
Land $51,200
Less: Fair value of land $12,000
Revaluation loss on land $39,200
Depreciation on non-current assets $395,200 ($77,600 + $17,600 + $300,000)
Written down value of assets including land $582,400
Less: Fair value of land $12,000
Written down value of assets than land $570,400
Total non-current asset other land $977,600
Less: Written down value other land $570,400
Impairment loss $407,200

9COMPANY ACCOUNTING
Bibliography:
Loftus, J., Leo, K.J., Daniluc, S., Boys, N., Luke, B., Ang, H.N., & Byrnes, K. (2019).
Financial Reporting, 3rd End. John Wiley & Sons, Milton, Queensland, Australia.