Homework Answers
Part- A
Since the total value of the assets purchased is more than the amount paid for the purchase, so the difference between the value of the assets and the amount paid will be considered as discount and the purchase cost will be allocated to all the assets on the basis of their value. Therefore accordingly the assets will be recorded at the following values
| Value | Value to be recorded | |
| Land | 262,500 | 245,000 |
| Building | 337,500 | 315,000 |
| Equipments | 150,000 | 140,000 |
| Total | 750,000 |
700,000 |
Part B
| Depreciation at nearest month | ||||||||
| Year | Asset | Cost | Residual Value | Depreciation Method | Depreciation rate | Useful life (in months) | Depreciation period | Depreciation |
| 2016 | Building | 315000 | 15000 | Straight line | 0.001388889 | 720 | 2 | 833.3333333 |
| Equipment | 140000 | 15000 | Double diminishing balance | 0.020833333 | 96 | 2 | 5208.333333 | |
| 2017 | Building | 315000 | 15000 | Straight line | 0.001388889 | 720 | 12 | 5000 |
| Equipment | 140000 | 15000 | Double diminishing balance | 0.020833333 | 96 | 12 | 31250 | |
| Half year depreciation in the year of acquisition | ||||||||
| Year | Asset | Cost | Residual Value | Depreciation Method | Depreciation rate | Useful life (in months) | Depreciation period | Depreciation |
| 2016 | Building | 315000 | 15000 | Straight line | 0.016666667 | 60 | 0.5 | 2500 |
| Equipment | 140000 | 15000 | Double diminishing balance | 0.25 | 8 | 0.5 | 15625 | |
| 2017 | Building | 315000 | 15000 | Straight line | 0.016666667 | 60 | 1 | 5000 |
| Equipment | 140000 | 15000 | Double diminishing balance | 0.25 | 8 | 1 | 31250 | |
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