1
Property Plant and Equipment
Notes for the year ended 30 June 2017 Land Buildings Machinery
Carrying amount at 1 July 2016 2,200,000.00 3,285,511.00
Cost (W1) 2,200,000.00 3,400,000.00
Accumulated depreciation (W2) (114,489.00)
Additions 1,692,000.00
Revaluation (W3) (W4) 600,000.00 250,518.00
Depreciation (W5) (96,029) (253,800.00)
Transfer to investment property 1,300,000.00 1,600,000.00
Question 2.2
Deferred Tax
Analysis of temporary differences
Revaluation:
Manufacturing land (1 00 000 x 80% x 28%) 22,400.00
161629 43,344.00
Manufacturing building (161629 − 25∗12−16 ∗ 12) ∗ 28%
Accelerated tax allowance (1 685 200 - 1 800 000 x 85%) x 28% 43,456.00
(Working 1)
Manufacturing Property
1 March 2015- 30 June 2015 = 4 months
1 July 2015- 30 June 2016 = 12 months
16 months
Administration Property
1 600 000 − 0 11
∗ = 𝟒𝟖𝟖𝟖𝟗
30 12
(Working 2)
(Working 3)
Land (1 500 000 - 1 400 000) + (1 300 000 - 800 000) 600,000.00
(Working 4)
Manufacturing Property
Net Replacement Value @ 30 June 2017 1,840,000.00
1840000−570000 56,029.00
Add Depreciation ( ∗ 12)
25∗12−16−12
Administrative Property
Carrying Amount @ 1 July 2016 (1 600 000 - 48 889) 1,551,111.00
1600000 9 40,000.00
Depreciation Current Year ( ∗ 12)
30
161629
Therefore total revaluation: + 88889
250518
(Working 5)
1 685 200
(Working 7)
Machinery @ Cost: 665 000 + 350 000 + 8 000 = 1 692 000
b) Journal Entries
Dr Cr
Investment Property (SFP) 1 300 000
Revaluation Surplus (OCI) 500 000
Land (SPF) 800 000
Revaluation of land and transfer to Investment Properties
Depreciation (P/L) (1600000/30*9/12) 40 000
Accumulated Depreciation (SPF) 40 000
Depreciation expense for the year
Investment Property 160 000
Building 160 000
Accumulated Depreciation (400 00 + 48 889) 88 889
Revaluation Surplus 88 889
Revaluation of building and transfer to Investment property
Deferred tax 131 911
Revaluation Surplus (500000x80% x28% + 88889x80x28%) 131 911
Deferred tax on Revaluation of administrative Land and
Buildings