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Depicting the different measures used in identifying fair values

   

Added on  2020-03-23

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Running head: FINANCIAL ACCOUNTINGFinancial AccountingName of the Student:Name of the University:Authors Note:
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FINANCIAL ACCOUNTING1Table of ContentsQuestion 1: Depicting the different measures used in identifying fair values...........................2Question 2:.................................................................................................................................31. Depicting the journal entries of Peewee Ltd for the year ended 30 June 2017:.....................32. Depositing the journal entries of Peewee Ltd for the year ended 30 June 2018:...................4Question 3:.................................................................................................................................61. Providing relevant explanation regarding internally generated intangible assets in AASB138/IAS 38:................................................................................................................................62. Mentioning about the difference between accounting for internally generated intangibleassets and acquired intangible assets in AASB 138/IAS 38:.....................................................73. Depicting why companies might be reluctant to change in AASB 138/IAS 38:...................7Question 4:.................................................................................................................................81. Mentioning the surplus or deficit of Wattle Ltd’s defined benefit plan at 31 December2016:...........................................................................................................................................82. Depicting net defined benefit asset or liability at 31December 2016:..................................93. Depicting net interest and the return on plan assets in 31 December 2016:..........................94. Providing reconciliation regarding opening balance and closing balance of the net definedbenefit liability:..........................................................................................................................95. Drafting journal entry to defined benefit superannuation plan in the books of Wattle Ltd forthe year ended 31 December 2016:..........................................................................................10Reference and Bibliography:....................................................................................................12
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FINANCIAL ACCOUNTING2Question 1: Depicting the different measures used in identifying fair valuesUsing the highest value of the plot for the valuation:The highest valuation of the premises is mainly identified, if the plot is used forresidential purposes. The residential valuation directly includes only the plot value andexcludes the value of factory. Therefore, the demolition cost for the factory is estimated to be$100,000, which directly helps in reducing the overall value of the land from $1,000,000 to$900,000. The overall value of the plot is identified to be $900,000 under the residentialvaluation. However, the second valuation technique that could be used for identifying thevalue of a plot includes the factory outlet, where relevant cost of around $780,000 will beincluded for setting up new factory. However, the existing factory plant if used will only costaround $390,000 for the factory work. There are many other low budget plots in which thefactory could be built for reducing cost of factory. The evaluation of the overall land forresidential purposes is relatively higher and could directly allow the company to generatehigh return from investment (Abbott & Tan‐Kantor, 2017).Depicting the significance of selling the plot in market value:The overall case directly indicates that selling the land for residential purpose coulddirectly provide higher returns from investment Maple Ltd. Identifying the overall asset that is subject to measurement: From the evaluation it could be identified that there are two different types ofvaluation that needs to be conducted identifying the actual value of the asset. The firstvaluation needs to be conducted for the overall plot and the second valuation is to beconducted on the factory (Malone, Tarca & Wee, 2016).However, the overall is it could alsobe valued as a single unit for deriving the actual value of the plot and actually.Adequately using valuation techniques:
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FINANCIAL ACCOUNTING3Two different types of approaches are used for evaluating the fair value of the land,which is determined under the residential purposes as $900,000. The highest value of the landneeds to be identified, which could directly allow the organisation to generate higher returnsfrom investment. The first valuation is mainly conducted for only the plot, where no inclusionis conducted on factory outlet. Furthermore, the second valuation is conducted on the factoryoutlet, which is for industrial purposes. The second valuation does not provide the adequatereturns, as the first valuation of residential plots. Therefore, the use of the plot for residentialpurpose could directly allow the organisation to generate higher returns from investment(Wang, 2016).Question 2:1. Depicting the journal entries of Peewee Ltd for the year ended 30 June 2017:1st July2016Machine A...........................................................DrMachine B...........................................................Dr Cash........................................................Cr100,00060,000160,00030th June2017Depreciation-Machine A................................................Dr Accumulated Depreciation............................Cr(1/5 * $100,000 = $20,000)20,00020,000Depreciation-Machine B................................................Dr Accumulated Depreciation.............................Cr(1/3 * $60,000 = $20,000)20,00020,000Accumulated Depreciation Machine A..........................Dr Machine A...................................................Cr(being writing down the carrying amount)20,00020,000Machine A.................................................................Dr Gain on revaluation of Machine A (OCI)........Cr(being revaluation of increment $80,000 to $84,000)4,0004,000Gain on revaluation of Machine A (OCI)........................Dr Asset revaluation surplus Machine A..............Cr(being increase in net revaluation gain in equity)4,0004,000Accumulated Depreciation Machine B..........................Dr Machine B...................................................Cr(being writing down the carrying amount)20,00020,000Loss on revaluation-Machine B....................................Dr2,000
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