Canadian Beach Pty Ltd Financial Report

Financial Report 1
CANADIAN BEACH PTY LTD FINANCIAL REPORT
By (Name)
The Name of the Class
Professor
The Name of the School
The City and State
Date

Financial Report 2
Canadian Beach Pty Ltd Financial Report
Introduction
According to AASB 116 (para 11), a company may acquire items of property, plant and
equipment for several reasons. Most of these items will help the company to increase its future
economic value while others will contribute indirectly towards company’s future economic
value. Canadian Beach Pty Ltd may have acquired some of the assets for economic value while
others may have been acquired to comply with some environmental regulations or to just
assisting other assets to provide more economic value to the company. AASB 116 (para 7)
provide the circumstances under which a cost of an item of property, plant and equipment should
be recognized as whether to result to an asset or not.
Qns 1.Depreciation expense for building and machinery
The company adopts a straight line method for depreciating the buildings and a diminishing
balance method to depreciate machinery. The depreciation is supposed to be based on the
historical cost of the assets (Küpper and Pedell, 2016). The historical cost of assets includes the
initial cost of the asset plus any other cost incurred to put the asset into its intended use (para 16,
AASB 116). The additional costs here include the following;
a. The purchase price, including import duties and non-refundable purchase taxes after
deducting any discounts provided.
b. Any costs directly attributable to bringing the asset into the location and condition
necessary for it to provide the required services and operate as expected by the
management.

Financial Report 3
c. The initial estimated costs for dismantling the asset or renovating the asset just to make it
work as expected.
Total cost for the building total cost for the Machinery
Original cost = $ 960,000 original cost $300,000
Renovation cost $30,000 installation cost $ 9,900
Total cost $ 990,000 training cost $3,600
Shipping cost $ 2,100
Total $ 315,600
Depreciation table
Financial year Building Machinery
30th June 2012 Depreciation=(cost –
residual)/useful life
=$(990,000-150,000)/10
= $ 84,000/2
= $ 42,000
Dep =(book value-
accumulated
dep)*depreciation factor
$ 315,600*20%
=$ 63,120/2
=$ 31,560
1st July 2012-30th June 2013 $ 84,000 (315,600-31,560)*20%
=$ 56,808
1st July 2013- 30th June 2014 $ 84,000 (315,600-88,368)*20%
=$ 42,446
1st July 2014- 30th June 2015 $ 84,000 (315,600-130,814)*20%