Accounting for Non-Current Assets

Name two cost components that should be capitalised when initially recognising a building under IAS 16. (2 marks)

(b) The following is a summary of the cash book of Azimio Ltd. for the year ended 31 May 2014: Cash book Sh.000 Sh.000 Balance brought forward Receipts 805 145,720 146,525 Payments Balance carried forward 146,203 322 146,525 Subsequent investigations reveal that: 1. A page of the receipt side of the cash book has been under cast by Sh.200, 000. 2. The following transactions appearing on the bank statement have not yet been entered in the cash book: ∑ Dividend received on a trade investment Sh.1, 147,000. ∑ Hire purchase repayments for 12 months at Sh.55, 000 per month. ∑ Interest for the half year to 30 November 2014 on a loan of Sh.20, 000,000 at 11 percent per annum. 3. Bank charges of Sh. 143,000 shown on the bank statement have not yet been entered in the cash book. 4. A cheque received from a customer for Sh.180, 000 was returned by the bank unpaid and no entry has been made in the cash book for this transaction. 5. The company owes Sh.430, 000 for electricity consumed in the month of May 2014. 6. A cheque for Sh.82, 000 has been debited to the company's account in error by the bank. 7. A cheque drawn for Sh.98, 000 has been entered in the cash book as Sh.89, 000 and another one- drawn for Sh.230, 000 has been entered as a receipt. 8. A transposition error occurred in the opening balance of the cash book. The opening balance should have been brought down as Sh.850, 000 instead of Sh.805, 000. 9. Cheques paid to suppliers totalling Sh.630, 000 have not yet been presented at the bank, while deposits totaling Sh.580, 000 made on 31 May 2014 have not yet been credited to the company's account. 10. The balance as per the bank statement is an overdraft of Sh.870, 000. Required: (i) Adjusted cash book balance. (ii) Bank reconciliation statement as at 31 May 2014.

(a) The property, plant and equipment balances of Matatizo Ltd. comprised the following as at 1 January 2013: Cost Depreciation Net book value Sh. ‘000’ Sh. ‘000’ Sh. ‘000’ Freehold land Buildings Plant and machinery Motor vehicles 30,000 38,520 70,200 37,800 - - 37,812 23,040 30,000 38,520 32,388 14,760 The company uses the straight line method of depreciation on assets as follows: • 10% per annum for plant and machinery. • 20% per annum for motor vehicles. REVISION PARTNER 4 CPA SEC 1-FA, LAW AND ENTREPRENEURSHIP Additional information: 1. It is the company's policy to make a depreciation charge proportionate to the period of usage of the asset. 2. An item of machinery bought on 1 July 2009 for Sh.10,080.000 was sold on 1 April 2013 at Sh.6,000,000. 3. From the year ended 31 December 2013, the management of the company decided to charge depreciation on buildings at a rate of 2.5% per annum. The buildings were all completed on 1 July 2009. 4. On 1 January 2013, a vehicle purchased on 1 May 2010 for Sh.12,600,000 was traded in at a value of Sh.7,320,000 in part exchange for a new vehicle costing Sh.18,000,000. 5. Included in machinery is an old machine which originally cost Sh.13, 500,000 and which was already fully depreciated and not expected to yield any material amount on either use or resale. 6. On 30 June 2013, a machine costing Sh.13, 500,000 was purchased from a vendor who had used it for three years. The vendor had bought the machine at Sh.18,000,000. Another machine costing Sh.10,500,000 was purchased on 1 August 2013. Required: A schedule showing the movement of property, plant and equipment for the year ended 31 December 2013.