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    Quiz 10-6746

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    hamna wahab
    ABC Ltd. has provided a trial balance for the year ending December 31, 2021 along with adjustments. The adjustments include costs capitalized to construction in progress (CWIP) for a new plant, loans obtained for the plant, interest earned, and impairment of a brand asset. The required financial statements are the statement of comprehensive income for the year ended December 31, 2021 and statement of financial position as of December 31, 2021.

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    Quiz 10-6746

    Uploaded by

    hamna wahab
    15 views2 pages
    ABC Ltd. has provided a trial balance for the year ending December 31, 2021 along with adjustments. The adjustments include costs capitalized to construction in progress (CWIP) for a new plant, loans obtained for the plant, interest earned, and impairment of a brand asset. The required financial statements are the statement of comprehensive income for the year ended December 31, 2021 and statement of financial position as of December 31, 2021.

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    Quiz 10-6746 (1)

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    ABC Ltd. has provided a trial balance for the year ending December 31, 2021 along with adjustments. The adjustments include costs capitalized to construction in progress (CWIP) for a new plant, loans obtained for the plant, interest earned, and impairment of a brand asset. The required financial statements are the statement of comprehensive income for the year ended December 31, 2021 and statement of financial position as of December 31, 2021.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    15 views2 pages

    Quiz 10-6746

    Uploaded by

    hamna wahab
    ABC Ltd. has provided a trial balance for the year ending December 31, 2021 along with adjustments. The adjustments include costs capitalized to construction in progress (CWIP) for a new plant, loans obtained for the plant, interest earned, and impairment of a brand asset. The required financial statements are the statement of comprehensive income for the year ended December 31, 2021 and statement of financial position as of December 31, 2021.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    ABC ltd. has the following trial balance for the year ending December 31, 2021.

      Dr. Cr.
         
    Land 1,000  

    Building - cost 2,000  

    Acc.dep. - building   500

    Plant - cost 5,000  

    Acc.dep. - plant   1,000


    Brand 3,000  
    Acc.amortization - brand 900
    CWIP ----  

    Inventory 500  

    Cash & bank balances 15,000  

    10% Bank loan - for qualifying asset   6,500

    12% Bank loan - general   6,000

    14% Bank loan - general   7,000

    Revenues   7,600

    Cost of sales 2,000  

    Operating expenses 500  

    Finance charges 500  

    29,500 29,500

    Adjustments:

    1) ABC decided to construct a plant during the year 2021and yet to record the following
    costs related to the qualifying asset.
    a. The specific loan was obtained on July1st, 2021, however, the commencement of
    plant started on Feb 1st, 2021. All the general loans were obtained on Jan 1st, 2021.
    b. ABC ltd. made the following payments to the contractor:
    i. $3,000 on Feb 1st, 2021
    ii. $2,000 on Mar 31st, 2021
    iii. $6,500 on Oct 31st, 2021
    All payments from April 2021 onwards were made from specific loan and general
    funds were utilized for all prior payments.
    c. ABC ltd. invested all the excess funds from general and specific loans to earn a
    return of 5%. Further, only $5,000 from general borrowings were utilized for the
    entire year of 2021.
    d. The asset was completed on Dec 31st, 2021.
    2) On Dec 31st, 2021, ABC obtained a bank loan of $500 from a govt. owned bank. The
    market rate of interest was 10% but a discounted rate of 6% was allowed by govt. The
    entire amount of loan was spent during December on company’s operating expenses.
    3) The brand cost was $3,000 and had a useful life of 10 years. An impairment review on
    July 1st, 2021, identified that brand had a value-in-use of $1,200 and a remaining useful
    life of 3 years. However, on the same date, the company received an offer to purchase the
    brand for $1,500. These entries were not recorded in the year 2021.

    Required:

    1) Statement of comprehensive income for the year ended December 31, 2021.
    2) Statement of financial position as at December 31st, 2021.

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