BCD Pte Ltd (“BCD PL”) is a Singapore incorporated company and
adopts the SFRSs. Its financial year-end is on 31 December.
On 1 January 20X1, BCD PL purchased a building in cash to house its
production facilities for $400,000. The building was measured
subsequently at depreciated historical cost. The building was
assessed as having a useful life of 10 years.
On 1 June 20X1, BCD PL had a change of plan and decided to sell the
building.
On 1 July 20X1, BCD PL placed the building with an agent for
immediate sale and have started advertising the building at a
selling price of $390,000 which was considered to be its fair
value. The selling expenses were estimated to be $14,000. The value
in use of the building was $375,000.
At 31 December 20X1, the building remained unsold. At that point,
the fair value less costs to sell was $375,000 and the value in use
of the building was $374,000.
The building was sold on 1 May 20X2 for $400,000 (net of selling
costs).
Required:
Illustrate the accounting for this building by BCD PL by preparing
the necessary journal entries, with journal narratives, from
purchase to disposal under the appropriate SFRS(s).
Journal entries from purchase to disposal
01-Jan | building of BCD PL | 400000 | ||
Cash | 400000 | |||
bcd purchased a building in cash, it has usefull life of 10 years. | ||||
31-Dec | Depreciation | 40000 | ||
building | 40000 | |||
Depreciation provided for the year in full | ||||
1 may 20x1 | Cash | 400000 | ||
building | 375000 | |||
Profit on sale of building | 25000 | |||
sale of building on 1 may 20x2 for 400000 | ||||
working note | ||||
Calculations of depreciation of building with usage of 10 years | ||||
cost of building | 400000.00 | |||
no of years of usefull life | 10 years | |||
Depreciation | 40000.00 | |||
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