country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Equipment Revaluation Decision In Indonesia

tag 0 Download10 Pages / 2,393 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

Discuss About The Equipment Revaluation Decision In Indonesia?

 

Answer:

Introducation

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.

 

Determine valuation premise/method

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.

Determination of market

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-

  • The existence of any title on the property, plant and equipment pledged as security and their respective amounts[4];
  • The amount of expenditures which are being recognised in the carrying amount of property, plant and equipment in its construction phase;
  • the amount of contractual obligations which are to be paid for the acquisition of the assets[5];
  • If the impairment is not disclosed separately in the comprehensive income statement, that is included in profit or loss account in total.

Determine Valuation technique

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

 

Calculations & General Journal Entries 1/7/16 to 30/6/17:

 (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)

 

 

Working Note:

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].

 

Calculations & General Journal Entries 1/8/18:

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)

 

 

Calculations & General Journal Entries 30/6/18:

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

Explain accounting issues

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.

Differences Internally Generated vs Acquired

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.

Reasons for Reluctance

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.

Deficit of Fund

 $28700000

As on 31st December 2016,

the value of benefit obligation 23000000
fair value of plan assets 20130000
Deficit of fund 28700000

Net Defined Benefit Liability

The defined net benefit liability on the year ended 31st December 2016 stood at 2870000. The amount is same as that of deficit of fund.

Net Interest

 3000000

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%)

 

Reconciliation

 

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

Journal Entries

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)

 

 

 

References

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.]

OR

Cite This Work

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 27 May 2020].

My Assignment Help. 'Equipment Revaluation Decision In Indonesia' (My Assignment Help, 2019) <https://myassignmenthelp.com/free-samples/equipment-revaluation-decision-in-indonesia> accessed 27 May 2020.

My Assignment Help. Equipment Revaluation Decision In Indonesia [Internet]. My Assignment Help. 2019 [cited 27 May 2020]. 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.

Latest Finance Samples

ACC00716 Finance

Download : 0 | Pages : 5
  • Course Code: ACC00716
  • University: Southern Cross University
  • Country: Australia

Answer: 1: Requirement a:   Requirement b:   Requirement c:   Requirement d:   Requirement e:   Requirement f:   2: The application of modern portfolio theory helps in explaining the concept of measures of interpretation of return and risks of investment. When it comes to perform the analysis of finance and investment by individual investors and company as a whole, one of the most influential theories ...

Read More arrow

HI5002: Finance For Business Research

Download : 0 | Pages : 9

Answer: Introduction: Woolworths Limited is regarded as one of the major Australian organization having extensive amount of retail interest across the regions of Australia and New Zealand. Woolworths Limited is regarded as the second largest company in Australia following the Perth Based retail company of conglomerate Wesfarmers. In addition to this, Woolworths Limited is regarded as the largest takeaway retailer of liquor in Australia with l...

Read More arrow Tags: Australia Brisbane Management Explain sociologically how social inequality (in terms of class and/or ethnicity) is constructed and James Coo 

ACST201 Financial Modelling

Download : 0 | Page : 1
  • Course Code: ACST201
  • University: Macquarie University
  • Country: Australia

Answer: Part A: Calcualtion of Implied annual nominal rate Annual Borrowing 100000 Number of payment 60 Monthly Payment 2000 Compounding Periods per year 12 Total Duration of Loan 5 Interest Rate 7%   Goal = Monthly Repayment to 2000   Annual Borrowing 100000 Number of payment 59 Compounding Periods per year 12 Interest Rate 7% Monthly Payment 200...

Read More arrow Tags: Australia Melbourne Finance Accounting University of Melbourne Management 

IC51002A Perspectives On Capital: Financial, Physical, Human And Social System

Download : 0 | Pages : 8
  • Course Code: IC51002A
  • University: Victoria University
  • Country: Australia

Ansqwer: Introduction: Social Capital is easily understandable as the web of the social relations which are distinguished by the norms of trust and the reciprocity. The basic core of the social capital is only the relations that humans maintain with people. The quality of the relations is understood with the help of social capital when people come together to resolve the issues they face commonly and in the end they gain mutual benefit from t...

Read More arrow

FELM4026 Financial And Economic Literacy For Managers

Download : 0 | Pages : 17

Answer: Introduction: The report has been prepared to evaluate the various concepts of business economics in UK market. For this analysis, various articles, economic report and the newspapers have been read so that a conclusion could be made about the business performance and the economic factors of the country.  Firstly, UK local high street store has been researched and it has been found that how the market is performing and one of the...

Read More arrow Tags: Australia Lewisham Management University of New South Wales Humanities 
Next
watch

Save Time & improve Grade

Just share Requriment and get customize Solution.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,320,224

Orders

4.9/5

Overall Rating

5,075

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1758 Order Completed

99% Response Time

William Martinez

MS in Biology

Washington, United States

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

610 Order Completed

100% Response Time

Cheryl Zhao

PhD in Statistics

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2830 Order Completed

97% Response Time

Leroy Bicknell

MBA in Marketing

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

453 Order Completed

98% Response Time

Howard Asuncion

LLM in Criminal Law

London, United Kingdom

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

very good writings, good references and really good pronunciation. would do here again the other time. very recommended!!!

flag

User Id: 409717 - 27 May 2020

Australia

student rating student rating student rating student rating student rating

must be a stupid expert who finished my assignment, don\'t trust it when they say, how good they are. They are all lies!!! i paid 148 dollars for 1000 words, and got less than 50%.!

flag

User Id: 422981 - 27 May 2020

Australia

student rating student rating student rating student rating student rating

It was good and was satisfied with this. This is completed and was passed right away after the presentation. Thank you!

flag

User Id: 238261 - 27 May 2020

Australia

student rating student rating student rating student rating student rating

They did a good job but this time i was no happy that much because i feel i need to let them again and again then even they did't done proper what i need but anyway once happend otherwise other all are mine good and i clear too

flag

User Id: 247567 - 27 May 2020

Australia

student rating student rating student rating student rating student rating
callback request mobile
Have any Query?