Question

P. 7-1 June 30, Entries to record capital assets can be derived from the schedule of changes in capital assets. Assets acquired with federal funds pose an interesting accounting issue (albeit one not addressed in the text). Balance June 30, Additions Deletions Balance 2020 2021 Land $100,298,761 $8,575,641 $2,318,535 $106,555,867 Buildings 173,307,375 11,241,166 3,672,542 180,875,999 Improvements and 122,911,080 24,777,538 10,568,363 137,120,255 equipment Construction work in 44,449,433 6,209,591 11,769,183 38,889,841 process Infrastructure 345,554,452 43,600,000 10,500,280 378,654,172 Total historical cost $786,521,101 $85,828,295 $36,510.368 $842,096,134 Less accumulated depreciation for:

Answer 1

1.

Improvements & Equipments A/c. (Dr.) and Cash A/c. (Cr.) - 24,777,538

Book Value of Asset Sold = 10,568,363 - 43,80,320 = 61,88,043

Profit on Sale = 12,000,000 - 6,188,043 = 5,811,957

Cash A/c. (Dr.) 12,000,000

Accum. Depreciation (Dr.) 4,380,320

Gain on Sale of Improvements & Equipments A/c. (Cr.) 5,811,957

Improvements & Equipments A/c. (Cr.) 10,568,363

2. 44.96% (378,654,172 / 842,096,134)

3. Asset will be recorded at 10 million, loss of 5 million will need to be booked. 2 million will be transferred to Current A/c. if Federal Govt.

4. Land will be continued to be valued at historical cost with suitable notes in the Notes to Accounts