Accounting Question

Q1. . (1.5 marks) a. IFRS requires capitalizing actual interest (with modification). What items are to be considered for capitalization? Explain. b. On November 1 2010 Saif Company contracted Ahmed Construction Co. to construct a building for $1600000 on land costing $400000 (purchased from the contractor and included in the first payment). Saif made the following payments to the construction company during 2011. Date Amount $ 1st Jan 500000 1st Mar 400000 1st Jun 350000 1st Sep 500000 1st Dec 250000 Required: Compute weighted-average accumulated expenditures for 2011 Q2. (1.5 marks) Presented below are the components related to an office building that ABC Company is considering purchasing for SAR10000000. Component Useful Life Value Building structure 60-year life 5400000 Building engineering 30-year life 2400000 Building external works 30-year life 900000 Instructions (a)Compute depreciation expense for 2010 assuming that ABC uses component depreciation. (b)Assume that the building engineering was replaced in 20 years at a cost of SAR 2600000 cash. Prepare the entry to record the replacement of the old component with the new component. Q3. A long-lived tangible asset is impaired when a company is not able to recover the asset’s carrying amount either through using it or by selling it. The management to identify whether the asset has impairment or no impairment conducts an impairment test. Explain how the impairment test conducted in both situations with numerical examples. (1 Mark) Q4. Explain the classified Intangible Assets with examples. (0.5Mark) Q5. Describe the procedure to issuing and marketing bonds to the public and indicates the factors considered in determining selling price of the bond? (0.5Mark)

Prof. Angela


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