| Account | Debit | Credit | |---------|-------|--------| | Interest expense | 2,527 | | | Lease liability | 7,473 | | | Cash | | 10,000 |
42,124 – 7,473 = $34,651 Topic 3: Deferred Tax (IAS 12) Question 3 A machine cost $100,000. Depreciation for accounting: 20% straight line. Tax depreciation: 40% reducing balance. Tax rate = 30%. financial accounting 2a questions and answers pdf
a) Calculate depreciation for 2020, 2021, 2022. b) Prepare journal entries for the revaluation on 31 Dec 2022. c) Show the extract of Statement of Financial Position as at 31 Dec 2022. Solution 1 a) Depreciation: Annual depreciation = 500,000 / 25 = $20,000 2020: $20,000 2021: $20,000 2022: $20,000 | Account | Debit | Credit | |---------|-------|--------|
| Account | Debit | Credit | |---------|-------|--------| | Building – Accumulated Depreciation | 60,000 | | | Building – Cost | | 60,000 | (To eliminate accumulated depreciation) | | | | Building – Cost (600k – 440k) | 160,000 | | | Revaluation Surplus (OCI) | | 160,000 | Tax rate = 30%
Suitable for: Second-year university, Diploma in Accounting, or IFRS foundations. Topic 1: Property, Plant & Equipment (Revaluation Model) Question 1 On 1 Jan 2020, Company X bought a building for $500,000 (useful life: 25 years, residual value: $0). On 31 Dec 2022, fair value was assessed at $600,000. The company uses the revaluation model and straight-line depreciation.
Carrying amount before revaluation (31 Dec 2022) = 500,000 – (20,000 × 3) = $440,000 Fair value = $600,000 → Revaluation surplus = $160,000