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Sue Lad is a winery and acquired four (4) properties in 2017 with the following values: 1. Grecan Manor KL.250.000 2. Oregon Country house 3,500,000 3. Montegro Mansion K6.250.000 4. Villa La Rosa K2.650,000 The company uses both the cost and revaluation model to value property, plant and equipment. a) Is this treatment acceptable? Justify your answer. b) In the years 2017 to 2019 Grecan Manor and Oregan Country house were expected to produce 25.000 and 370.000 litres of wine of wine respectively from a total of 70.000.000 litres over their combined useful lives. Montegro Mansion is deprecated at 13% on a reducing balance basis while Villa la Rosa has a 50 year useful life. During the year to December 2018, the company adopted the revaluation model for its property. plant and equipment. Sheldon Surveyors gave the following market values for the properties in 2018 and 2019 Property 2018 2019 K K Grecan Manor 1.270,000 1.250,000 Oregon Country house 4,000,000 3,987875 Montesto Mansion 4,572,000 3.997,640 Villa La Rosa 2.320,000 2,400.000 Grecan Country bouse and Villa la Rosa were used as administrative offices in the final part of the vineyard start-up from 1 January to 31 October 2018 after which they were used solely for capital appreciation. Oregon country house and Montegro Mansion were checked annually for the rise in their values and any gain taken to other income up to December 2018 after which they were used in the production of wine only. How will the gains or losses on revaluation be shown in 2018 and 2019? Show the actual gains or losses and the double entry of each property for the years 2018 and 2019, c) Montegro Mansion and Oregon country bouse were bought from general borrowings. The total loan book of the business is as follows: K 25% unsecured loan 450.000 30% unsecured loan 3.750.000 15% secured loan 6.300,000 22% debeature 750.000 12% bond 3.300.000 What was the borrowing cost at the end of 2017 i KL 250.000 on Montegro Mansion was invested from 1 January to 31 May 2017 at 6 and 50% of the amount borrowed for Oregon country house was invested at 10% from January to 30 April 2017? d) At the end of 2019, Villa La Rosa was sold on a sale and leaseback arrangement for its carrying amount at that date. The term of the lease agreement is 3 years with payments of KS11,308 made on 30 June and 31 December each year. The rate of interest implicit on the lease is 15%. What is the value of the so-current and current liability at the end of 202017 Sue Lad is a winery and acquired four (4) properties in 2017 with the following values: 1. Grecan Manor KL.250.000 2. Oregon Country house 3,500,000 3. Montegro Mansion K6.250.000 4. Villa La Rosa K2.650,000 The company uses both the cost and revaluation model to value property, plant and equipment. a) Is this treatment acceptable? Justify your answer. b) In the years 2017 to 2019 Grecan Manor and Oregan Country house were expected to produce 25.000 and 370.000 litres of wine of wine respectively from a total of 70.000.000 litres over their combined useful lives. Montegro Mansion is deprecated at 13% on a reducing balance basis while Villa la Rosa has a 50 year useful life. During the year to December 2018, the company adopted the revaluation model for its property. plant and equipment. Sheldon Surveyors gave the following market values for the properties in 2018 and 2019 Property 2018 2019 K K Grecan Manor 1.270,000 1.250,000 Oregon Country house 4,000,000 3,987875 Montesto Mansion 4,572,000 3.997,640 Villa La Rosa 2.320,000 2,400.000 Grecan Country bouse and Villa la Rosa were used as administrative offices in the final part of the vineyard start-up from 1 January to 31 October 2018 after which they were used solely for capital appreciation. Oregon country house and Montegro Mansion were checked annually for the rise in their values and any gain taken to other income up to December 2018 after which they were used in the production of wine only. How will the gains or losses on revaluation be shown in 2018 and 2019? Show the actual gains or losses and the double entry of each property for the years 2018 and 2019, c) Montegro Mansion and Oregon country bouse were bought from general borrowings. The total loan book of the business is as follows: K 25% unsecured loan 450.000 30% unsecured loan 3.750.000 15% secured loan 6.300,000 22% debeature 750.000 12% bond 3.300.000 What was the borrowing cost at the end of 2017 i KL 250.000 on Montegro Mansion was invested from 1 January to 31 May 2017 at 6 and 50% of the amount borrowed for Oregon country house was invested at 10% from January to 30 April 2017? d) At the end of 2019, Villa La Rosa was sold on a sale and leaseback arrangement for its carrying amount at that date. The term of the lease agreement is 3 years with payments of KS11,308 made on 30 June and 31 December each year. The rate of interest implicit on the lease is 15%. What is the value of the so-current and current liability at the end of 202017

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