- Required 1 Prepare The Necessary Entries T Revalue The Building And The Vehicle As At 30 June 20x1 2 Assume That Bui 1 (119.61 KiB) Viewed 10 times
- Required 1 Prepare The Necessary Entries T Revalue The Building And The Vehicle As At 30 June 20x1 2 Assume That Bui 2 (119.61 KiB) Viewed 10 times
- Required 1 Prepare The Necessary Entries T Revalue The Building And The Vehicle As At 30 June 20x1 2 Assume That Bui 3 (119.15 KiB) Viewed 10 times
- Required 1 Prepare The Necessary Entries T Revalue The Building And The Vehicle As At 30 June 20x1 2 Assume That Bui 4 (119.15 KiB) Viewed 10 times
Required: 1. Prepare the necessary entries t revalue the building and the vehicle as at 30 June 20X1. 2. Assume that building and vehicle had remaining useful lives of 25 years and 4 years respectively, with zero residual value. Prepare entries to record depreciation expense for the year ended 30 June 20X2 using the SLM. 9. Case study: Research & Development: 10.3 RESEARCH AND DEVELOPMENT Batura Laboratories Ltd manufactures and distributes a wide range of general pharmaceutical products. Selected audited data for the reporting period ended 31 December 2010 are as follows: Gross profit $17 600 000 Profit before income tax 1700 000 500 000 Income tax expense Profit for the period 1 200 000 Total assets: Current Non-current 7 300 000 11 500 000 The company uses a standard mark-up on cost. From your audit files, you ascertain that total research and development expenditure for the year amounted to.$4 700 000. This amount is substantially higher than in previous years and has eroded the profitability of the company. Mr Bosch, the company's finance director, has asked for your firm's advice on whether it is acceptable accounting practice for the company to carry foward any of this expenditure to a future accounting period. Your audit files disclose that the main reason for the significant increase in research and devel- opment costs was the introduction of a planned 5-year laboratory program to attempt to find an antidote for the common cold. Salaries and identifiable equipment costs associated with this program amounted to $2 350 000 for the current year. The following additional items were included in research and development costs for the year: (a) Costs to test a new tamper-proof dispenser pack for the company's major selling line (20% of sales) of antibiotic capsules - $760 000. The new packs are to be introduced in the 2011 financial year. (b) Experimental costs to convert a line of headache powders to liquid form- $590 000. The company hopes to phase out the powder form if the tests to convert to the stronger and better handling liquid form prove successful. (c) Quality control required by stringent company policy and by law on all items of production for the year- $750 000. (d) Costs of a time and motion study aimed at improving production efficiency by redesigning plant layout of existing equipment- $50 000. (e) Construction and testing of a new prototype machine for producing hypodermic needles - $200 000. Testing has been successful to date and is nearing completion. Hypodermic needles accounted for 1% of the company's sales in the current year, but it is expected that the com- pany's market share will increase following introduction of this new machine. Required Respond to Mr Bosch's question for each item above. THE END
Required: 1. Prepare the necessary entries t revalue the building and the vehicle as at 30 June 20X1. 2. Assume that building and vehicle had remaining useful lives of 25 years and 4 years respectively, with zero residual value. Prepare entries to record depreciation expense for the year ended 30 June 20X2 using the SLM. 9. Case study: Research & Development: 10.3 RESEARCH AND DEVELOPMENT Batura Laboratories Ltd manufactures and distributes a wide range of general pharmaceutical products. Selected audited data for the reporting period ended 31 December 2010 are as follows: Gross profit $17 600 000 Profit before income tax 1 700 000 500 000 Income tax expense Profit for the period 1 200 000 Total assets: Current Non-current 7 300 000 11 500 000 The company uses a standard mark-up on cost. From your audit files, you ascertain that total research and development expenditure for the year amounted to.$4 700 000. This amount is substantially higher than in previous years and has eroded the profitability of the company. Mr Bosch, the company's finance director, has asked for your firm's advice on whether it is acceptable accounting practice for the company to carry foward any of this expenditure to a future accounting period. Your audit files disclose that the main reason for the significant increase in research and devel- opment costs was the introduction of a planned 5-year laboratory program to attempt to find an antidote for the common cold. Salaries and identifiable equipment costs associated with this program amounted to $2 350 000 for the current year. The following additional items were included in research and development costs for the year: (a) Costs to test a new tamper-proof dispenser pack for the company's major selling line (20% of sales) of antibiotic capsules - $760 000. The new packs are to be introduced in the 2011 financial year. (b) Experimental costs to convert a line of headache powders to liquid form- $590 000. The company hopes to phase out the powder form if the tests to convert to the stronger and better handling liquid form prove successful. (c) Quality control required by stringent company policy and by law on all items of production for the year $750 000. (d) Costs of a time and motion study aimed at improving production efficiency by redesigning plant layout of existing equipment - $50 000. (e) Construction and testing of a new prototype machine for producing hypodermic needles - $200 000. Testing has been successful to date and is nearing completion. Hypodermic needles accounted for 1% of the company's sales in the current year, but it is expected that the com- pany's market share will increase following introduction of this new machine. Required Respond to Mr Bosch's question for each item above.