Please attach one cover sheet with your SID and name, please answer questions including all working process, please submit on the moodle, only word file will be accepted, keep similarity rate as low as possible, less than 20%The deadline is Friday night-23:00pm in week 5, 01/Feb/2019, 10% penalty for one day late. No extension will be given, no excuses will be accepted.Use your SID and name to be the name of the file.
Question 1 (8 marks) On 1 July 2011 Sprintfast Couriers, which has a year-end of 30 June, purchased a delivery truck for use in its courier operations at a cost of $65 000. At the end of the truck’s useful life it is expected to have a residual value of $5000. During its six-year useful life, Sprintfast Couriers Limited expected the truck to be driven 246 000 kilometres.RequiredCalculate the annual depreciation charge for each of the six years of the truck’s life using the following methods:(a)the straight-line method(b)the sum-of-digits method(c)the declining-balance method(d)the units-of-production method using kilometres as the basis of use and assuming the following usage:YearKilometres201228 000201334000201442 000201555 000201668 000201719 000246 000Question 2(8 marks)Petersen Ltd has the following land and building in its financial statements as at 30 June 2018:$Residential land, at cost1 000 000Factory land, at valuation 2016900 000Buildings, at valuation 2016800 000Accumulated depreciation(100 000)At 30 June 2018, the balance of the revaluation surplus is $400 000, of which $300 000 relates to the factory land and $100 000 to the buildings. On this same date, independent valuations of the land and building are obtained. In relation to the above assets, the assessed fair values at 30 June 2018 are:$Residential land, previously recorded at cost1 100 000 Factory land, previously revalued in 2016700 000 Buildings, previously revalued in 2016900 000RequiredProvide the journal entries to account for the revaluation on 30 June 2018. Petersen Ltd classifies the residential land and the factory land as different classes of assets.Question 3 (16 marks)Deliveries Ltd leased a truck from a truck dealer, City Vans Ltd. City Vans Ltd acquired the truck at a cost of $180 000. The truck will be painted with Deliveries Ltd’s logo and advertising and the cost of repainting the truck to make it suitable for another owner four years later is estimated to be $40 000. Deliveries Ltd plans to keep the truck after the lease but has not made any commitment to the lessor to purchase it. The terms of the lease are as follows:•Date of entering lease: 1 July 2019.•Duration of lease: four years.•Life of leased asset: five years, after which it will have no residual value. Lease payments: $ 100,000 at the end of each year.•Interest rate implicit in the lease: 10 per cent.•Unguaranteed residual:$50 000.•Fair value of truck at inception of the lease: $351 140.REQUIRED(a)Demonstrate that the interest rate implicit in the lease is 1O per cent.(b)Prepare the journal entries to account for the lease transaction in the books of the lessor. City Vans Ltd at 1 July 2019 and 30 June 2020.(c)Prepare the journal entries to account for the lease transaction in the books of the lessee, Deliveries Ltd, at 1 July 2019 and 30 June 2020. (d)On 30 June 2023 Deliveries Ltd pays the residual of $50 000 and purchases the truck. Prepare all journal entries in the books of Deliveries Ltd for 30 June 2023 in relation to the termination of the lease and the purchase of the truck.Question 4(8 marks)Jerry Lopez works for Lightning Bolt Ltd. His annual salary is $100000 and he is paid weekly. As part of his employment agreement, he is entitled to four weeks’ annual leave each year. He receives a leave loading of 17.5 per cent.REQUIRED(a)Provide the weekly journal entries to record the recognition of Jerry Lopez’s annual leave entitlements.(b)Provide the appropriate journal entries, assuming that Jerry Lopez takes two weeks’ annual leave after being employed for one year and assuming that the tax deducted from the payment for the two weeks is $1200.
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