Question 6.16: A business with an accounting period which runs from January...

Financial Accounting An IFRS Perspective in Romania

A business with an accounting period which runs from January 1st to December 31st, purchases a new intangible asset on April 1st, 20X8, in the amount of 24,000 lei. The expected useful life of the asset is 4 years and its residual value is nil. What should the amortisation charge for 20X8 be?

The "Step-by-Step Explanation" refers to a detailed and sequential breakdown of the solution or reasoning behind the answer. This comprehensive explanation walks through each step of the answer, offering you clarity and understanding.
Our explanations are based on the best information we have, but they may not always be right or fit every situation.

The blue check mark means that this solution has been answered and checked by an expert. This guarantees that the final answer is accurate.
Learn more on how we answer questions.

This Question has been Answered.

Already have an account?

Related Answered Questions

Question: 6.5

Company ABC purchases equipment from the supplier of 119,000 lei (VAT 19% included). A transportation invoice of 10,000 lei plus 19% VAT is paid to TRANS SRL to deliver the equipment to the ABC location; an amount of 10,000 lei is due for installation procedures and 5000 lei is calculated to be ...

Verified Answer:

a) What is the acquisition cost of the equipment? ...

Question: 6.23

A piece of equipment for the car plant, purchased for the price of 100,000 lei (net of VAT), with net custom taxes of 10,000 lei, chequing procedures of 10,000 lei (net of VAT), estimated to be used for 10 years, applying the double-decline method (no residual value) is sold by the end of the 4th ...

Verified Answer:

Step 1. Computation of the initial cost of the equ...

Question: 6.22

An assembly line of a car manufacturer, costing 1 million lei, depreciated straight-line for 10 years and tested for impairment by the end of year 5. At that moment, the fair value of the assembly line is 300,000 lei and the value in use is 390,000 lei. Is the asset impaired? What is the Balance ...

Verified Answer:

The net carrying amount by the end of year 5 is 50...

Question: 6.15

MarCom SA purchased a new commercial vehicle with an estimated useful life of five years. The cost of the asset was 22,500 lei (net of VAT) and its residual value after five years was estimated to be 2500 lei. Show the effects of the annual depreciation. ...

Verified Answer:

Using the straight-line method, the annual depreci...

Question: 6.8

A building, with a cost of 22 mil. lei, is depreciated over 20 years via the straight-line method (a residual value of 2 mil. lei is estimated). The following events occur: (a) during the 3rd year of use its internal walls are repainted, the overall cost is 80,000 lei (no VAT added) (b) on December ...

Verified Answer:

The painting process by the end of the third year ...

Question: 6.24

As provided in the pre-accession strategy, one of the ways in which the European Union supports the development of Candidate States is by co-financing projects for small and medium sized enterprises. Assume that on December 5th, 20X3, Construct SRL is awarded a grant of 5000 euros through the EU ...

Verified Answer:

a) The company intends to use the grant for the pu...

Question: 6.25

Company ALFA purchased a piece of land in the amount of 280,000 lei, commission expenses amounted to 22,000 lei and notary fees amounted to 8000 lei. The land is meant to be rented to third parties. On March 1st, 20X1, immediately after the purchase, the fair value of the asset is 325,000 lei. On ...

Verified Answer:

1) March 1st, 20X1—Acquisition of investment prope...

Question: 6.26

Company GAMMA owns a building (investment property) which was rented to third parties. On December 31st, 20X2, the managers decide to start using this building for the company’s administrative purposes. The building’s fair value at December 31st, 20X1, amounts to 22,000 lei and on December 31st, ...

Verified Answer:

Based on the information provided, the company wil...

Question: 6.17

On January 1st, 20X2, Industrial SA purchases metal processing equipment in the amount of 90,000 lei plus 10,000 lei installation and testing costs. The estimated useful life is 5 years, giving a straight-line percentage of 20%. A residual value of 5000 lei is estimated. Management believes that ...

Verified Answer:

Acquisition cost = Purchase price + expenses direc...

Question: 6.21

A complex piece of equipment for a car plant was purchased, checked and put into operation. The following data are provided: • Invoice amount owed to supplier 119,000 lei. (VAT of 19% included) • Transportation cost to the plant location 11,900 lei. (VAT of 19% included) • Checking procedures in ...

Verified Answer:

Step 1. Computation of the initial cost of the equ...