CAF-01: FAR-1 Property, plant and equipment (IAS-16)

Lecture 2 (IAS-16) Lecture 2 (overall)

Classwork:
1. Discussed question 1; 2; 4 and 5 from lecture 1 handout;
2. Solved question 13 (Mr. Babar) from lecture 1 handout;
3. Solved Question 17 and 18 from chapter 7 of Crescent book:
Question-17
Mr. Qasim purchased an asset for Rs.90 on 1st January 2010. Life is 3 years and year end is
31st December.
Requirement: Prepare B/S extracts for 2010, 2011, 2012.
Question-18
Mr. Ehsan has provided the following information as on 1.1.2012 / Following balances are
appearing in the books of Ehsan as on 1.1.2012.
Asset A/C 900,000
Acc. Dep. A/C 350,000
Following additions took place during the year ended 31.12.2012
Date of Purchase Cost (Rs)
1 May 2012
st
180,000
1st August 2012 130,000
Rate of Dep is 20% on straight line.
Requirement: Prepare Asset and Acc. Dep. a/c as on 31st December 2012 and 2013.
Homework:
Question-19
Mr. Asif has informed you that following balances are appearing on 1.1.2009 in his books of accounts:
Cost Accumulated Depreciation
Vehicles 300,000 113,000
Following is the detail of additions during the year ended December 31, 2009:
Date of Purchase Cost
Vehicle – ACT 1.3.2009 10,000
Vehicle – MGY 1.5.2009 15,000
Rate of depreciation is 20% per annum using straight line method.
Required:
Prepare relevant accounts for year ended December 31, 2009.
Question-14
Mr. Anjum has started the business on January 1, 2009 of trading in shoes. He has disclosed the following data
for first three years of his business operations which relates to additions in fixed assets:
Date of Purchase Cost (Rs.)
Year end December 31, 2009
- Asset-1 1.1.2009 30,000
- Asset-2 1.7.2009 10,000

Year end December 31, 2010

- Asset-3 1.4.2010 50,000

Year end December 31, 2011

- Asset-4 1.7.2011 60,000
Useful life of all assets is 4 years.
Required:
Prepare an asset a/c, accumulated depreciation a/c and balance sheet extracts using above mentioned
information for first three years of operations.

Umair Sheraz Utra, ACA. Page |1

CAF-01: FAR-1 Property, plant and equipment (IAS-16)

Question-15
Mr. Sultan has started the business on January 1, 2010 of trading in computers. He has disclosed the following
data for first two years of his business operations which relates to additions in fixed assets:
Date of Purchase Cost
Year end December 31, 2010
Asset – 1 1.1.2010 30,000
Asset – 2 1.4.2010 40,000
Asset – 3 1.6.2010 50,000
Year end December 31, 2011
Asset – 4 1.3.2011 70,000
Rate of depreciation is 25% per annum using straight line method.
Required:
Prepare asset A/c, accumulated depreciation A/c for year ended December 31, 2010, 2011, 2012.
Question-16
Mr. Waqar has started the business on January 1, 2013 of trading in chairs. He has disclosed the following data
for first two years of his business operations which relates to additions in fixed assets:
Date of Purchase Cost
Year end December 31, 2013
Building – 1 1.1.2013 10,000
Building – 2 1.5.2013 15,000
Year end December 31, 2014
Building – 3 1.8.2014 13,000
Building – 4 1.9.2014 12,000
Useful life of all assets is 6 years and method used for depreciation is straight line.

Required:
Prepare asset a/c and accumulated depreciation a/c for year ended December 31, 2013 and 2014.

Homework Solution (Lecture 1)

Answer-4
Calculation of Depreciation
Rs.
Depreciation = (Cost – residual value)  Rate per annum
Depreciation for 2004 = (50,000-10,000) 25%  9/12 = 7,500
Depreciation for 2005 = (50,000-10,000)  25% = 10,000
Depreciation for 2006 = (50,000-10,000)  25% = 10,000
Depreciation for 2007 = (50,000-10,000)  25% = 10,000

Answer-5
Calculation of Depreciation
Rs.
Depreciation = (Cost – residual value)
Useful life
Depreciation for 2004 = (70,000 – 20,000)  6/12 = 6,250
4
Depreciation for 2005 = (70,000 – 20,000) = 12,500
4
Depreciation for 2006 = (70,000 – 20,000) = 12,500
4

Umair Sheraz Utra, ACA. Page |2