Below questions answers were requested by some student in class, thus I’m putting it for all students references.
Tri 1, 2011
Calculation Question
1. EROS LTD
If the roof were treated as a separate component of the building:
Roof: depreciation p.a. = $140 000 x 1/20 = $7 000
Rest of building: depreciation p.a. = $700 000 x 1/20 = $35 000
At 1 July 2007, the roof would have been depreciated to $91 000 (being $140,000 less 7 x $7 000). This would then be written off on replacement of the roof. The new roof would be depreciated at $12 222, being 1/18 x $220,000 p.a.
Further, the rest of the building would have a carrying amount of $455 000, being $700 000 less 7 x $35 000. Depreciation p.a. for the next 18 years would be $25 278.
Total depreciation is then $37 500.
If the roof were not treated as a separate component:
Depreciation p.a. = 1/20 x $840 000 = $42 000
At 1 July 2007, the building would have been depreciated to a carrying amount of $546 000, being $840 000 – 7 x $42 000. On replacement of the roof, the total depreciable cost is $766 000, being $546 000 + $220 000. Depreciation p.a. for the next 18 years is $42 556.
Calculation Questions
5 a) Non-accumulating sick leave is recognised when the leave is taken.
Employee category
Base pay /day
Leave taken in 2010
Employee benefits
Provision for Sick Leave
$
Days
$
$
Supervisors
100.00
20
2 000
Nil
Operators
80.00
400
32 000
Nil
$34 000
Nil
Workings
There is no opening balance of sick leave, even if accumulating, because all employees commenced in the current year.
Provision for sick leave:
Category
Wage
/day
Current Service
Days taken
Term.
Clos bal.
Accum. 30/6/10
Exp. To be Used
Provision
$
Days
Days
Days
Days
$
%
$
Supervisors
100
30
20
3
7
700
90
630
Consultant
80
500
400
60
40
3200
70
2240
c)
3900
b)
2870
Accumulating...