Semester “Fall 2011”
“Financial Accounting II (MGT401)”
Assignment No. 01 Total Marks: 15
Question No. 1 (5 Marks)
On October 01, 2010 Model Company Limited, in the course of improvement and enhancement of its production facility, imported a plant from abroad having invoice value of Rs. 30 million for the production of its popular brand of electrical goods. A special trade discount of 25% was allowed by the vendor. Mr. Goodman, one of the directors, was assigned the duty of supervising the installation of the plant.
Other information is given below:
Rs.
Expenses related to the import of the plant 1,620,000
Site preparation vusolutions 4,900,000
Operating losses before commercial production 400,000
Cost of test run & special staff training 730,000
Misc. Administrative Expenses 75,000
Interest paid to the vendor for deferred credit 200,000
Compensation by the vendor for capacity default 900,000
Estimated dismantling and other costs 1,150,000
Cost of damaged instruments 150,000
Required: Determine the cost of the plant to be recognized initially in the books of account.
Question No. 2
Furniture Point is the renowned name in the furniture market. They are dealing in five major wooden components of vusolutions furniture i.e. sofas, bed sets, dressing tables, dining tables and wardrobes. At 31st December, 2010 the inventory in hand was as follows:
Required: Calculate the value of inventory as on December 31, 2010 under IAS 2 – Inventory. Also pass necessary adjusting entries in this regard, if required.
Idea Solution will be soon
