Solution-Prepare journal entries to record the acquisition

Prepare journal entries to record the acquisition

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Reference no: EM131579073

Question - Pacific Ventures Limited (PVL) acquired the following assets on 1 January 2017. Information relevant to the assets are provided below:

Items of asset	Acquisition costs ($)	Useful economic life
Land	400.000	n/a
Building	700.000	50 years
Equipment	400.000	5 years
Furniture	105.000	15 years

The following additional costs were incurred in relation to the assets acquired:

Legal fees and registration charges on land	$25,000
Legal fees on building	6,000
Freight in importing the equipment	5,000
Import duty on equipment	2,000
Customizing the factory floor	25,000
Installation of equipment	12.000

The suppliers delivered the furniture to PVL free of cost.

Subsequent fair values less costs of disposal of the assets were determined as follows:

Date	Items of asset	Fair value ($)
1 January 2018	Land	450.000
	Building	800.000
	Equipment	200.000
	Furniture	70,000
1 January 2020	Land	350.000
	Building	450.000
	Equipment	160,000
	Furniture	50,000

The company uses straight-line method of depreciation for its non-current assets and uses fair value (i.e.. the revaluation model) for financial reporting purposes. Estimated residual values upon expiry of respective useful economic lives of building. equipment and furniture are Zero.

Required - Prepare journal entries to record the acquisition of the assets on 1 January 2017 and the changes in asset values on 1 January 2018 and 2020.

Reference no: EM131579073

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Prepare journal entries to record the acquisition

Reference no: EM131579073

Reference no: EM131579073

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