Discuss About The Equipment Revaluation Decision In Indonesia?
The subject matter of measurement is the land and property which is demolished and renewed by the entity engaged in manufacturing of women shoes. The cost of land and factory will be recognised only if the entity is certain about its future economic benefits and the asset’s cost can be measured reliably[1]. The entity does the evaluation of all the costs associated with property, plant and equipment under this recognition principle (Plant, Property and Equipment AASB 116), at the time when they are incurred. These costs include the costs which are incurred initially at the time of acquiring or constructing the asset and subsequent costs incurred to replace or reconstruct the asset[2]. The costs associated with the day to day service are not to be included in the carrying amount of asset. These costs are recognized separately in the profit or loss account.
After the land and factory is recognized as an asset whose fair value is measureable reliably shall be represented at revalue amount minus any accumulated depreciation and impairment losses; this will give its fair value at the date of the revaluation[3]. Revaluations shall be made regularly for ensuring that there is no material discrepancy in carrying amount and the fair value of the asset at the end of the reporting period.
The fair value of asset is usually determined by evidence provided by appraisal of market undertaken by professionals. The fair value asset is usually their current market value. The entity must allocates the initial amount of the non-current tangible assets to its significant parts and apply depreciation to each part separately. On the other hand if the entity acquires the psychology asset on lease basis, it is appropriate to depreciate the asset separately. The disclosure required by standard requires reflecting the following-
As per the valuation technique provided by IAS 116, the valuation of land will be done in the following manner-
Market value of land+ demolishing cost+ cost of construction
10, 000, 00+ 10, 000, 00+780000= 27, 80,000
(Amount in $)
Date |
Account |
DR |
CR |
1-07-2016 |
Machine A/c DR. |
100000 |
|
|
Bank A/C Cr. |
|
100000 |
|
(Being machine A purchased) |
|
|
1-07-2016 |
Machine A/c Dr. |
60000 |
|
|
Bank A/c Cr. |
|
60000 |
|
(Being Machine B purchased) |
|
|
30-06-2017 |
Depreciation A/c Dr |
20000 |
|
|
Machine A A/c Cr. |
|
20000 |
|
(Being depreciation charged for the year) (Note: 1) |
|
|
30-6-2017 |
Depreciation A/c Dr |
20000 |
|
|
Machine B A/c Cr. |
|
20000 |
|
(Being depreciation charged for the year) (Note: 2) |
|
|
30-06-2017 |
Machine A A/c Dr |
4000 |
|
|
Revaluation Surplus Cr |
|
4000 |
|
Profit on revaluation is transferred to revaluation surplus account. (Note:3) |
|
|
30-6-2017 |
Revaluation Surplus A/c Dr |
2000 |
|
|
Machine B A/c Cr. |
|
2000 |
|
(Loss on revaluation in charged to revaluation surplus account). (Note: 4) |
|
|
Note1
Depreciation of Machine A
Cost of Machine $100000
Expected useful life 5 years
Depreciation $100000/5
Depreciation of Machine B
Cost of Machine $60000
Expected useful life 3 years
Depreciation $60000/3
$20000 p.a.
Revaluation Surplus on Machine A
Fair value of Machine A on 30th June 2017
= $84000
Book Value of Machine A on 30th June 2017
=$100000-$20000
=$80000
Revaluation Surplus of Machine A
Fair Value – Book Value
$84000- $80000
$4000
Impairment loss on Machine B
Fair value of Machine B on 30th June 2017
= $38000
Book Value of Machine B on 30th June 2017
=$40000
Impairment Loss
=$38000-$40000
=-$2000
In accordance with provisions specified in AASB 116 Property, Plant and Equipment revaluation surplus is transferred to surplus on revaluation account[6]. Further, if any loss relating to revaluation occurs than the same is adjusted with existing balance of revaluation account and in case of higher loss the remaining balance is charged to profit and loss accounting as impairment loss[7].
Date |
Account |
DR |
CR |
1-1-2018 |
Bank Account Dr. |
29000 |
|
|
Revaluation A/c Dr |
2000 |
|
|
Profit & Loss A/c Dr. |
7000 |
|
|
Machine B A/c Cr. |
|
38000 |
|
(Being machine B sold at loss of $9000) |
|
|
1-1-2018 |
Cash A/c Dr |
80000 |
|
|
Machine C A/c Cr. |
|
80000 |
|
(Being machine purchased for cash) |
|
|
1-1-2018 |
General reserve A/c Dr. |
8000 |
|
|
Revaluation Surplus A/c Dr. |
2000 |
|
|
Share Capital A/c Cr. |
|
10000 |
|
(Being bonus share issued) |
|
|
Date |
Account |
DR |
CR |
30-6-2018 |
Depreciation A/c Dr. |
21000 |
|
|
Machine A A/c Cr |
|
21000 |
|
(Being depreciation charged) (Note 1) |
|
|
30-6-2018 |
Depreciation A/c Dr. |
20000 |
|
|
Machine C A/c Cr. |
|
20000 |
|
(Being depreciation charged) (Note 2) |
|
|
30-6-2018 |
Impairment loss A/c Dr |
3500 |
|
|
Machine A Cr. |
|
2000 |
|
Machine C A/c Cr. |
|
1500 |
|
(Being impairment loss charged) (note 3 & 4) |
|
|
Working Notes
Depreciation as per revaluated amount
Revalue amount / No of remaining years
$84000/ 4
= $21000
= $80000/4
= $ 20000 p.a.
= $10000 for six months
Impairment loss
$61000 - $63000 ($84000-$21000)
$2000
Impairment loss
$68500-$70000 ($80000-$10000)
$ 1500
Internally generated cost of intangible assets generally meant for paragraph 24 is the total of expenditure held from the specific date, when recognition criteria is faced by intangible assets in (para 21, 22 and 57). As per the paragraph 71, it avoids the expenditure’s re-instalments prior to be recognised as expense[8]. Internally generated cost of intangible assets is combined with all the direct attribute costs required to make the assets capable to operate in an effective manner for the purpose of management.
According to AASB 123, the recognition criteria of interest are a component of internally generated cost of intangible assets. These are the non-components of internally generated cost of intangible assets; Expenditure incurred on training staff members in order to operate asset, recognized inefficiencies and primary loss on operation held before achieving the goal. Once the initial requirement is satisfied, an intangible asset shall be recognized at cost from which accumulated amortization and any impairment losses will be subtracted.
After the initial recognition is done an intangible asset’s amount shall be revalued, as fair value at the specific date of revaluation from any accumulated amortization and any impairment losses will be subtracted. For revaluation purpose as per the Standard, fair value must be measured by considering active market. Revaluation must comprise with such kind of regularity which ultimately does not vary from its fair value. On the contrary under IAS 38, there are several requirements for accounting of intangibles and will vary on the basis of source of asset. Internally generated cost of intangible assets shall be valued initially on the basis of direct attributable costs which will meet the terms with recognition criteria (para 81). Individually obtained intangibles shall be valued at the cost of actual transaction, inclusive of directly attributable costs having the asset readily available (para 82)[9]. It must be considered that the transactional price for individually obtained intangibles may be assisted by valuing of assets before the transaction; however it is not considered as an actual requirement. After analysing methods available in both the standard it can be assessed that it is comparatively easier for calculation.
Companies may be unwilling to accept changes required by AASB 138/IAS 38 in order to access recognition of internally generated intangible assets in appropriate manner. As the use of intangible is essentially more complex to measure comparatively to other assets; the same is due to changes in goodwill value are unstable and changeable[10]. Systematic provision of intangible asset is subjective; it is complex to impartially state the life and depreciation method used.
$28700000
As on 31st December 2016,
the value of benefit obligation 23000000The defined net benefit liability on the year ended 31st December 2016 stood at 2870000. The amount is same as that of deficit of fund.
Working notes:
Expense of interest Defined Benefit obligation’s components:
Brought forward value of Defined Benefit Obligation $20, 000, 000
Service cost of previous year $2, 200, 000
(2, 000,000+2, 200,000*10%)
Components of Interest income 19,000,000
(19,000,000*10%)
|
Liability of Net Defined Benefit |
Obligation of Defined Benefit |
Plan Assets |
Balance as on 1/1/16 |
1,000,000 |
20000000 |
19000000 |
Cost of Past service |
|
2000000 |
|
Adjusted Balance |
|
22000000 |
|
10% interest |
|
2200000 |
1900000 |
Cost of Present service |
|
800000 |
|
Fund Contributions received |
|
|
1000000 |
Funds’ paid Benefits |
|
(2100000) |
(2100000) |
Return on Plan Assets excluding Interest |
|
|
330000 |
Remeasured Actual loss of Defined Benefit Obligation |
|
100000 |
|
Balance as 31st December 2016 |
2870000 |
23000000 |
20130000 |
Working note for Return on Plan Asset
Fair value of Plan Asset as on 31st December 2016 $20 130 000
Minus:
Opening balance $ 19 000000
Income from Interest $ 1 900000
Contributions $ 1 000000
Payment of benefits (2 100 000) - 19 800 000
Return on Plan Assets $ 330 000
Date |
Particular |
Dr. |
Cr. |
30/6/2013 |
Expense related to Superannuation (P/L) Dr
|
3 100 0000 |
|
|
Superannuation Income Account Cr |
|
230 000 |
|
Bank A/c Cr |
|
1 000000 |
|
Superannuation liability A/c Cr |
|
1 870000 |
|
(being Superannuation expense and contributions accounted) |
|
|
Basu, A. and Andrews, S., 2014. Asset allocation policy, returns and expenses of superannuation funds: recent evidence based on default options. Australian Economic Review, 47(1), pp.63-77.
Cheung, E. and Lau, J., 2016. Readability of Notes to the Financial Statements and the Adoption of IFRS. Australian Accounting Review, 26(2), pp.162-176.
Davies, B., 2014. Defined Benefit vs Defined Contribution or is There a Third Way? Defined Ambition Schemes: An Alternative Approach to Risk Sharing.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting. Pearson Higher Education AU.
Ji, X.D. and Lu, W., 2014. The value relevance and reliability of intangible assets: Evidence from Australia before and after adopting IFRS. Asian Review of Accounting, 22(3), pp.182-216.
Lubbe, I., Modack, G. and Watson, A., 2014. Financial Accounting GAAP Principles. OUP Catalogue.
Yao, D.F.T., Percy, M. and Hu, F., 2015. Fair value accounting for non-current assets and audit fees: Evidence from Australian companies. Journal of Contemporary Accounting & Economics, 11(1), pp.31-45.
Zakaria, A., Edwards, D.J., Holt, G.D. and Ramachandran, V., 2014. A Review of Property, Plant and Equipment Asset Revaluation Decision Making in Indonesia: Development of a Conceptual Model. Mindanao Journal of Science and Technology, 12(1), pp.1-1.
AASB 116.Property Plant and Equipment. 2016. (PDF). Available through < https://www.aasb.gov.au/admin/file/content105/c9/AASB116_07-04_COMPjun09_07-09.pdf>. [Accessed on 30th September 2017.]
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2019). Equipment Revaluation Decision In Indonesia. Retrieved from https://myassignmenthelp.com/free-samples/equipment-revaluation-decision-in-indonesia.
"Equipment Revaluation Decision In Indonesia." My Assignment Help, 2019, https://myassignmenthelp.com/free-samples/equipment-revaluation-decision-in-indonesia.
My Assignment Help (2019) Equipment Revaluation Decision In Indonesia [Online]. Available from: https://myassignmenthelp.com/free-samples/equipment-revaluation-decision-in-indonesia
[Accessed 26 January 2021].
My Assignment Help. 'Equipment Revaluation Decision In Indonesia' (My Assignment Help, 2019) <https://myassignmenthelp.com/free-samples/equipment-revaluation-decision-in-indonesia> accessed 26 January 2021.
My Assignment Help. Equipment Revaluation Decision In Indonesia [Internet]. My Assignment Help. 2019 [cited 26 January 2021]. Available from: https://myassignmenthelp.com/free-samples/equipment-revaluation-decision-in-indonesia.
MyAssignmenthelp.com is one of the noted service providers that deliver essay help. We provide tailored essay assistance to make sure that student gets online essay help exactly in the way they want it to be written. We at MyAssigemnthelp.com have built teams of consultants, who readily attend every query related to help me writing my essay. We provide essay writing help in forms of tips and steps in order o assist students with tough essay assignments.
Answer: Whether it is possible for the Thor Mining Machinery Ltd and Volvo Trucks (Australia) Ltd to take action against the Steve for breach of contract? Law Common law discuss the concept of pre-registration contracts, and as defined by the common law when any individual sign the contract on behalf of the organization which is not yet registered then such contracts are known as the pre-registration contract. Corporation Act 2001 als...
Read MoreAnswers: 1. Workings Particulars Amount ($) Labour Cost 320000 Maintaince Cost 32000 Depreciation 16666.67 Total 368666.6667 CFAT for 12th yr 385333.33 Workings Particulars Amount ($) Cost 570000 Maintaince 60,000 Installation 30,000 Total cost 660,000 Add: Salvage value 71250 CFAT of 8th year 731,250 Determination...
Read MoreAnswers: 1. Calculating the future value: Particulars Value PMT $ 500 Time 9 Rate 10% Future Value 500 * ((((1 + 10%)^9) - 1) / 10%) Future Value $ 6,789.74 Particulars Value PMT $ 900 Time ...
Read MoreAnswer: Background of the study The financial services and banking industry have reflected tremendous growth in from the last few decades. Regardless of making such considerable improvements in relation with financial growth, viability and competitiveness, there is the presence of concerns that financial accessibility is not still able to serve underprivileged sections, remote and rural areas. Further, in the study has discussed how the finan...
Read MoreAnswer: Particulars Large Medium Small Total Sales Units $ 2,300.00 $ 1,500.00 $ &n...
Read MoreJust share requirement and get customized Solution.
Orders
Overall Rating
Experts
Our writers make sure that all orders are submitted, prior to the deadline.
Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.
Feel free to contact our assignment writing services any time via phone, email or live chat. If you are unable to calculate word count online, ask our customer executives.
Our writers can provide you professional writing assistance on any subject at any level.
Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.
Get all your documents checked for plagiarism or duplicacy with us.
Get different kinds of essays typed in minutes with clicks.
Calculate your semester grades and cumulative GPa with our GPA Calculator.
Balance any chemical equation in minutes just by entering the formula.
Calculate the number of words and number of pages of all your academic documents.
Our Mission Client Satisfaction
I am writing to you to let you know that I am extremely impressed with your recent work. You\'ve dedicated years of service to this company, and your work exemplifies and principles now more than ever. Thank you for all that you have done to help us ...
Australia
Very good experience, so happy with the result. Very highly and strongly recommend this website.
Australia
I got a good price and quality work was provided to me in a short period of time. I scored really well in my assignment. All the rework was done in time which is great.
Australia
They have provided me with work having 0% plagiarism which really helped me to score well in my assignment.
Australia