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QUESTION THREE [25] Richy Limited has plant that cost R345000(including vat) on 01...

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Accounting

QUESTION THREE [25]
Richy Limited has plant that cost R345000(including vat) on 01 January 2018. Installation
and modification costs R69000(including vat). Transfer costs paid to lawyer amounted to
R20000. Transport costs for bringing the asset to location amounted to R20000. The plant
was ready for use on 01 January 2018. The machines were cleaned on 01 March 2018 at a
cost of R10000. Due to the low order levels in April 2018 the plant stood idle.
Depreciation is provided over its useful life of 5 years using the straight line method to a nil
residual value.
Richy Limited measures plant under the revaluation model. The plant was revalued as
follows:
31 December 2018 R310000
31 December 2019 R300000
31 December 2020 R250000
Richy Limited transfers the maximum amount from the realised portion of the revaluation
surplus to equity. VAT must be calculated at 15%.
Required:
Disclose the above information in the notes to the financial statements for years ending
2018,2019 and 2020.(Include in you answer the journal entries that must be recorded in the
general journal.)

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