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Assignment Question(s): Marks 5
Chapters covered 10, 11, 12, 13 & 14
Q1. (1.5 marks)
IFRS requires capitalizing actual interest (with modification). What items are to be considered for capitalization? Explain.
On November 1, 2010, Saif Company contracted Ahmed Construction Co. to construct a building for $1,600,000 on land costing $400,000 (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 500,000
1st Mar 400,000
1st Jun 350,000
1st Sep 500,000
1st Dec 250,000
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 SAR10,000,000.
Component Useful Life Value
Building structure 60-year life 5,400,000
Building engineering 30-year life 2,400,000
Building external works 30-year life 900,000
(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 2,600,000 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)