Question 4 Samdisk Ltd owns a property which was purchased on 1 January 2015 for $5,000,000, of...

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Accounting

Question 4
Samdisk Ltd owns a property which was purchased on 1 January2015 for $5,000,000, of which $1,000,000 was considered
to relate to the land on which the building is situated. Thecompany has followed a policy of depreciating the buildings atthe
rate of 5 percent on cost per annum. On 31 December 2017, theproperty was valued by a firm of chartered surveyors at
$4,000,000 of which $1,200,000 was considered attributable tothe value of the land. The valuers further estimated that the
property possessed a remaining useful life of 30 years from 1January 2018.
Required:
a Prepare journal entries with narratives for recording therelevant transactions for the year ended 31 December 2017 for thisproperty.
b Prepare journal entries with narratives for recording thedepreciation charges for this property.
c Show the details relating to the property which would appearin the statement of financial position and statement of profit orloss on 31 December 2017 and 31 December 2018.

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Answer Date Journal Entries Debit Credit 1Jan15 Land 100000000 Building 400000000 To CashBank 500000000 Being Purchase of Land and Building Part b 31122015 Depreciation on Building PL 20000000 4000000 5 To Building 20000000 Being depreciation for building year 1 at 5 31122016 Depreciation on Building PL 20000000 4000000 5 To Building 20000000 Being depreciation for building year 2 at 5 Note the question says 5 on cost so it is assumed to be on Straight Line Part a 31st See Answer

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Question 4Samdisk Ltd owns a property which was purchased on 1 January2015 for $5,000,000, of which $1,000,000 was consideredto relate to the land on which the building is situated. Thecompany has followed a policy of depreciating the buildings attherate of 5 percent on cost per annum. On 31 December 2017, theproperty was valued by a firm of chartered surveyors at$4,000,000 of which $1,200,000 was considered attributable tothe value of the land. The valuers further estimated that theproperty possessed a remaining useful life of 30 years from 1January 2018.Required:a Prepare journal entries with narratives for recording therelevant transactions for the year ended 31 December 2017 for thisproperty. b Prepare journal entries with narratives for recording thedepreciation charges for this property. c Show the details relating to the property which would appearin the statement of financial position and statement of profit orloss on 31 December 2017 and 31 December 2018.