Advanced Financial Accounting for the Year 2019 (Math Problem Sample)
Description of events on Alpha Financial Statements for the year ended 31 December 2019.According to the IAS 38, research is an innovative and scheduled investigation carried out by an organization to gain new technical or scientific insights.While IAS 38 standards address the treatment of research and development costs in the accounting books, such standards vary across industries and even organizations.
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Advanced Financial Accounting
Name
Institution
WORD COUNT:1519
Question one
Description of events on Alpha Financial Statements for the year ended 31 December 2019
Item description
Amount in Financial Statements 000'
Explanation/Calculations
Freehold land
3,000
These are direct costs of the construction of the facility, including all associated legal costs.
Site preparation
650
Direct cost of constructing the facility
Materials
8,300
Direct cost of constructing the facility
Direct labor costs
6,000
Direct cost of constructing the facility
Legal fees
1,500
Direct cost of constructing the facility
General overheads
940
Direct cost of constructing the facility
Finance Costs
800
This is the capitalization of the loan interests incurred during the 8 months of construction. (Loan 12,000,000*0.10=1,200,000 per annum. However, the construction took only 8 months; therefore, the capitalized amount will be 1,200,000 divided 8/12, which amounts to 800,000.
Cost of decommissioning the facility
10,000
Since Alpha is obligated to decommission the project after its useful life of 20 years, this should be treated as an initial cost.
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