Question

Shares and general reserves 11. Calling Card Co Ltd has acquired a printing press from Metal Manufacturers Ltd. The deal required Calling Card Co Ltd to exchange the following assets for the printing press Shares in Calling Card Co Ltd 50 000 shares with a market value of $1.10 each Cost 520 000, accumulated depreciation $8000; fair value 515 000 $5.000 Carrying Amonton Vehicle Cash The cost to install the press was $1000 (not yet paid). What is the entry to record the purchase of the printing press? A.De Printing press 75 000 Dr Accumulated depreciation 8000 Cr Share capital 55 000 Cr Vehicle 20 000 Co Gain on disposal of vehicle 3010 Cr Cash 5000 76 000 5000 B. Dr Printing press Dr Loss on disposal of vehicle Cr Share capital Cr Vehicle Cr Installation cost payable Cr Cash 55 000 20 000 1000 5000 75 000 8000 C. Dr Printing press Dr Accumulated depreciation Cr Share capital Cr Vehicle C Gain on disposal of vehicle Cr Installation cost payable 55 000 20 000 1000 D Dr Printing press 73 000 Dr Accumulated depreciation 8000 Cr Share capital Cr Vehicle Cr Installation cost accrued Cr Cash 12. If an asset's 'value in use' exceeds its market value then: 55 000 20 000 1000 5000 A. an entity should adjust the current carrying amount of the asset to book value. B. it would be expected that the entity would dispose of the asset immediately. C. an impairment loss will need to be recorded. D. it would be expected that the entity would retain the asset. ut that had a book value of $40 000 for a truck that had a inment is $45 000 and the

Answer 1

Question - (11)

Answer -

Journal entry to record the purchase of the printing press

General Journal	Debit ($)	Credit ($)
Printing press Accumulated depreciation Share capital [50000 shares * $1.10] Vehicle Gain on disposal of vehicle [Difference] Installation cost payable Cash	76000 8000 - - - - -	- - 55000 20000 3000 1000 5000

Hence, Option - (C) is Correct.