On 1 October 2020 property, plant, and equipment of Kobia Limited consisted of the following balances:


Original Cost
Accumulated Depreciation

Land and buildings
R550 000
-

Plant and Equipment
R875 400
R338 200

Motor vehicles
R647 000
R211 000

Furniture and fittings
R125 000
R 32 000

The straight-line rates of depreciation, based on cost, used to date were 10% per annum for plant and equipment; 20% per annum for motor vehicles; and 12.5% per annum for furniture and fittings. It is the company’s policy to make full year’s depreciation charge on new capital items of fixed assets in the year of purchase. No depreciation is raised on capital items sold during the year. The following additional information is relevant to the calculation of depreciation for the year ended 30 September 2021.

a) Walter & Associates, a firm of appraisers and valuers, professionally valued Land, and buildings during the year at R975 000. When land and building were acquired, R350 000 was attributable to the buildings.

b) An item of equipment bought in November 2016 for R105 000 is now recognised to have a total useful life of 20 years.

c) A motor vehicle purchased in June 2018 for R85 000 was traded in at a value of R44 000 in part exchange for a new motor vehicle costing R140 000.

d) Included with the furniture and fittings is an item which originally cost R15 000, and which is already fully depreciated and is to be discarded.

You are required to:
Prepare a reconciliation schedule for property, plant, and equipment in a form suitable for inclusion in the company’s financial statements for the financial reporting period ended 30 September 2021. Clearly show the amount to be charged against the year’s profits and the balances to be shown on the statement of financial position. You may include the relevant accounting policy note as part of your answer. Ignore taxation.

The preparation of a reconciliation schedule for property, plant, and equipment in a suitable form for the financial reporting period ended 30 September 2021 for Kobia Limited is as follows:

                                           Land &          Plant &           Motor        Furniture

                                         Building       Equipment      Vehicles     & Fittings

Beginning balance        R550 000       R875,400     R647,000    R125,000

Revaluation/Addition       425,000             -                 140,000        (15,000)

Write-off                                                                         (85,000)

Ending balance             R975,000       R875,400     R702,000     R110,000

Beginning balance                   -           R338,200      R211,000     R 32,000

Adjustments:

Depreciation Expense            -             R87,540      R140,400      R 13,750

Write-off                                                                        (34,000)

Ending balance                                    R425,740     R317,400       R45,750

a) Land and Building:

Revaluation Surplus = R425,000 (R975,000 - R550,000)

b) Useful life of the new item of equipment = 20 years

c)  Additional Motor Vehicle = R140,000

d) Motor Vehicle

Trade-in value at cost = R85,000

Trade-in value Accumulated Depreciation = R34,000 (R85,000 x 20% x 2 years)

Book value of Motor Vehicle = R51,000

Exchange value =                        44,000

Loss from trade-in =                    R7,000

                                           Land &          Plant &           Motor        Furniture

                                         Building       Equipment      Vehicles     & Fittings

Depreciation Rate                 0                   10%              20%             12.5%

Depreciation Expense       R0             R87,540     R140,400       R 13,750

Learn more about Accumulated Depreciation at https://brainly.com/question/25141635

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