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Rhys is the owner of Venturin Meat Supplies. Venturin Meat Supplies’ adjusted trial balance at 31 December 2016 (end of the reporting period) included the following balances:     Processing Plant (at cost; purchased 10 April 2013) $148 650  Accumulated Depreciation – Processing Plant 109 135  Trucks Control (at cost) 291 400  Accumulated Depreciation Control – Trucks 174 200  
The Trucks Control and Accumulated Depreciation Control – Trucks accounts are supported by subsidiary ledgers. Details of trucks owned at 31 December 2016 are as follows:  
 Truck Purchase Cost Estimated Estimated   Date  Useful Life Residual Value  1 25 August 2013 $61 000 4 years $3 400  2 05 March 2014 $70 600 4 years $3 400  3 02 August 2014 $75 600 4 years $3 600  4 23 October 2014 $84 200 5 years $3 200  
Additional information Rhys uses the general journal for all entries, calculates depreciation to the nearest month, balances his accounts 6-monthly, and records amounts to the nearest dollar. Rhys uses straight-line depreciation for all depreciable assets except the processing plant, which is depreciated at 30% p.a. on the diminishing balance. The following transactions and events occurred during 2017:  
January 27 Traded-in Truck 1 for a new truck (Truck 1A) which cost $84 100. A trade-in allowance of $10 200 was received and the balance was paid in cash. Registration and painting costs of $1500 were also paid in cash. Rhys estimated Truck 1A’s useful life and residual value at 5 years and $4600. June 02 Modernised the processing plant at a cash cost of $61 574. Although the modernisation significantly expanded the plant’s operating capability and efficiency, Rhys decided that no revision to the depreciation rate was warranted.
 
School of Business     Summer Semester 2015-16 Page 7 of 10  
Faculty of Law, Education, Business and Arts Higher Education, External  
July 24 Sold Truck 3 for $25 000 in cash. September 28 Exchanged Truck 2 (fair value at exchange date: $10 640) for computer equipment. The computer equipment’s fair value was $10 550 at exchange date. The computer equipment originally cost $26 600 and had been depreciated in the previous owner’s accounts by $15 850 to date of exchange. Rhys estimated the computer equipment’s useful life and residual value at 4 years and $320. December 31 Recorded depreciation.  
Required:  
(a) Prepare journal entries to record the above transactions and events. (Narrations are not required.)  
(b) Prepare the Processing Plant and Accumulated Depreciation Control – Trucks general ledger accounts for the period 1 January 2017 to 31 December 2017.   
PART C  
AC Toys Pty Ltd (AC Toys) acquired an item of plant and equipment with a fair value of $500,000 on 30 June 20X7 via a non-cancellable finance lease. The terms of the lease are as follows:  ten equal annual payments of $100,000 (excluding GST) to be made in advance (the first instalment was paid on 30 June 20X7)  interest rate implicit in the lease is 20.24183%  estimated useful life of the asset is 10 years. Straight-line depreciation method to be used  Present value of minimum lease payments (PVMLP) at 30 June 20X7 is $500,000.  
Required:  
(a) Prepare the journal entries necessary for a manufacturer or dealer lease in the accounts of the lessor for the financial years ended 30 June 20X7 and 30 June 20X8. (Assume that the cost of the asset to the lessor was $450,000.)   
(b) Using the same information as for part (a) above, and assuming that the carrying value of the asset is $500,000 in the lessor’s books, prepare the journal entries necessary for a finance lease in the accounts of a lessor that is not a manufacturer or dealer for the financial years ended 30 June 20X7 and 30 June 20X8.   
PART D  
Biloba Limited (Biloba) has three divisions, A, B and C, which operate independently of each other to produce medical products. The company has headquarters and a research centre that are located in Brisbane, with the three divisions being located in regional Queensland. The research centre, which has only recently been established, interacts with all the divisions to improve both products and processes.   
There is not yet any basis on which to determine how the work of the research centre will be allocated to each of the three divisions, as that will depend on the priorities of the company overall and on issues that arise in each of the divisions. The company headquarters provides approximately equal



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