Ah Huat Coach Builders Sdn Bhd assembles coaches. It operates its business from a site rent 10 years ago from siamese connection Koon Realty for RM540000. The take up has 40 more years to run. When suppliers arrive with parts posted, a storekeeper checks the items delivered and listed in the delivery document against Ah Huats secure order. A copy of the checked documents is then sent to the Accounts Department. The storekeeper then records the quantity of parts received.
At the end of the fiscal year, December 31 2008, there are 2 coaches be RM 100,000 each, which have been completed and 1 coach is half assembled.
The lodge also has a 25-seater coach to transport its employees. The coach was bought in 2000 for RM60, 000 and has been well maintained that it could be sold for RM 50,000.
Ah Huats accounts private instructor is unsure of how the completed coaches and the 25-seater coach should be accounted for. How should it be determine for reporting purposes? What about the leasehold land? Since the owner is actually Tai Koon Realty should the land be part of Ah Huats assets at year end? Should the supply of spare parts be included in the financial statements too?
Please respond to the above issues.
Answers
1. How the completed coaches and the 25-seater coach should be accounted for?
2. How should it be treasured for reporting purposes?
The completed coaches should be accounted as inventory:
origin Finished Coaches: 2 X RM 100,000 = RM 200,000
The 25 seater coaches should be accounted as asset under the ride Vehicle
|Fixed Asset | constitute |Accumulated Depreciation |Net book value |
|Motor Vehicle |RM 60000 |(RM 60000) |Nil |
Note: We have made the precondition that, the coach would have...If you want to get a full essay, order it on our website: Orderessay
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