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SEMESTER SPRING 2018
FINANCIAL ACCOUNTING II (MGT401)
ASSIGNMENT NO. 01
DUE DATE: 24TH MAY, 2018 MARKS: 20
After going through this activity, the students would be able to apply the analytical skills.
Topic: “Property, Plant and Equipment”
ABC Corporation Limited purchased machinery three years ago for Rs. 1,000,000 with an
estimated useful life of 10 years. Currently its accumulated depreciation is standing at Rs.
300,000. This gives the net book value of Rs. 700,000 (1,000,000 – 300,000). The service of a
professional valuer has been acquired by the ABC Corporation Limited to carry out the process
of revaluation of fixed assets. He has briefly described the process of valuation to the
management of the company as follows:
As per International accounting standards (IAS.16) relating to Property, Plant and Equipment,
the complete process of accounting for revaluation of non-current assets comprise of three
1. Adjusting the cost of asset i.e. account of asset for impairment loss / profit
2. Eliminating accumulated depreciation of asset being revalued
3. Recognizing revaluation gain or loss
After explaining the complete process now the management has presented him two different
situations to deal with:
In 1st case the fair value estimation of machinery is significantly more than the net book value
and in 2nd case it is significantly less than the book value. These values are as follows:
Fair market value of machinery is Rs. 1,500,000; or
Fair market value of machinery is Rs. 500,000
Required: You are required to keep yourself at the position of professional valuer and provide
the calculations of impairment loss/profit, how accumulated depreciation account will be
eliminated, and calculations of revaluation gain / loss and adjusting entry of revaluation
process in both cases by keeping in mind the above mentioned three steps.
Note: Provide the solution in the following table form otherwise your assignment will not
Note: Thorough reading and understanding is required to answer the required questions.
24 hours extra / grace period after the due date is usually available to overcome uploading
difficulties. This extra time should only be used to meet the emergencies and above mentioned
due dates should always be treated as final to avoid any inconvenience.
IMPORTANT INSTRUCTIONS/ SOLUTION GUIDELINES/ SPECIAL INSTRUCTIONS
If plagiarism found more than 20%, your assignment will be marked zero because
university is following no plagiarism policy. Plagiarism reports will be attached with
your assignment solution files to give you exact results of copied data.
Only to the point and relevant answers are required with proper logics.
OTHER IMPORTANT INSTRUCTIONS:
Make sure to upload the solution file before the due date on VULMS.
Any submission made via email after the due date will not be accepted.
Use the font style “Times New Roman” or “Arial” and font size “12”.
It is advised to compose your document in MS-Word format.
You may also compose your assignment in Open Office format.
Use black and blue font colors only.
FMV is Rs. 1,500,000 FMV is Rs. 500,000
Step : 1
Step : 2
Step : 3
Use APA style for referencing and citation. For guidance search “APA reference style”
in Google and read various websites containing information for better understanding or
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
It is submitted after the due date.
The file you uploaded does not open or is corrupt.
It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF
It is cheated or copied from other students, internet, books, journals etc.
Note related to load shedding: Please be proactive
As you know that Pre-Mid-Term semester activities have started and load shedding problem is
also prevailing in our country. Keeping in view the fact, you all are advised to post your
activities as early as possible without waiting for the due date. For your convenience; activity
schedule has already been uploaded on VULMS for the current semester, therefore no excuse
will be entertained after due date of assignments or GDBs.
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Plz anyone idea solution???
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MGT401 Assignment Solution
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