Question

BCD Pte Ltd (“BCD PL”) is a Singapore incorporated company and adopts the SFRSs. Its financial...

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).

Homework Answers

Answer #1

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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