Illustration 4 Layar Bhd acquired a new boat on 1 January 2015 at cost of RM1,600,000. The boat was accounted for as follows: Components Body Fixtures & fittings Engine
Useful life 20 years 5 years 4 years
Cost [RM] 1,200,000 100,000 300,000
On 1 January 2018, it was discovered the engine was leaking. Layar Bhd replaced the old engine with a new set of engine at a cost of RM360,000. The useful life of the new engine is 6 years. Required: a.
Construct the Statement of Financial Position (extract) of Layar Bhd for as at 31 December 2018 to account for the transactions given above.
b.
Show the notes to account for property, plant and equipment.
Solution –illustration 4
a.
Statement of financial position as at 31 December 2018
Non-current asset Property, plant and equipment
b.
RM1280,000
Notes to account –property, plant and equipment Body At cost / valuation Balance b/d (1.1.2018) Add: new engine Less : derecognised Balance c/d (31.12.2018) Accumulated depreciation Balance b/d (1.1.2018) Current depreciation Less: derecognised Balance c/d (31.12.2018) Carrying amount as at 31.12.2018
RM 1,200,000
Fixtures & fittings RM 100,000
Engine
1,200,000
100,000
180,000 60,000
60,000 20,000
240,000
80,000
225,000 60,000 (225,000) 60,000
960,000
20,000
300,000
RM 300,000 360,000 (300,000) 360,000