Solution of Financial Accounting Problem


Sir can u answer these problems....Please !

Financial accounting

Part 1

Rockhampton Ltd has acquired a new machine, which it had installed in its factory. Which of the following items should be capitalized into the cost of the building?
(a) Labor and travel costs for managers to inspect possible new machines and for negotiating for a new machine
(b) Freight costs and insurance to get the new machine to the factory
(c) Costs for renovating a section of the factory, in anticipation of the new machine’s arrival, to ensure that all the other parts of the factory will have easy access to the new machine
(d) Cost of cooling equipment to assist in the efficient operation of the new machine.
(e) Costs of repairing the factory door, which was damaged by the installation of the new machine
(f) Training costs of workers who will use the machine

Provide a one sentence explanation giving the reason for capitalizing or expensing, in each case.


a) It is revenue expenditure because, it is routine duty of purchase manager to see and negotiate for new machine. It will not be the part of capital expenditure.
b) It must be capital expenditure and also be the part of machine’s cost.
c) It is also revenue expenditure because there is no increment in fixed asset.
d) It is capital expenditure due to increasing the fixed asset in factory.
e) It is general expense and be revenue expenditure.
f) It is also revenue expenditure. You can ask me why and I can answer, training costs is part of salary of worker not the part of asset. After installing machine by labor, no other charges will add except purchasing of new part of machine. You should also read "Difference between revenue and capital items."

Part 2

Maryborough Ltd has acquired a new building for $500000. It has incurred incidental costs of $10000 in the acquisition process for legal fees, real estate agent‘s fees and stamp duties. Management believes that these costs should be expensed because they have not increased the value of the building and if the building was immediately resold, these amounts would not recouped. In other words, the fair value of the building is considered to still be $500000.


Explain how Maryborough Ltd should account for the $510000 it has expended with respect to the building.


Maryborough ltd should not sell building even for $ 510000 because, he should earn minimum 20% margin. But if Maryborough ltd is providing free services like me, then it should clearly say to purchaser who is purchasing your building

1. Do you eat bread or wheat? He will surely say bread not wheat. In India, the cost of bread is Rs. 20 just two pieces and cost of wheat is Rs. 15 per kg. It means the person who gives you bread in plate calculate the full price of 2 bread after adding following fees.

a) Salary of worker
b) Wheat cost
c) Fire cost
d) Furniture depreciation
e) Lighting cost
f) Rent
g) Depreciation of fan
h) Owner’s profit
i) Depreciation of plate
j) Owner’s Mobile expenses
k) Owner’s petrol expenses
l) Owner’s cable expense
m) Damage of food
n) Inflation in the prices of raw material
o) Insurance bill of employee
p) Gifts of wife
q) Fees of children
r) And many other expenses

Dear purchaser, I am taking minor cost which is the part of building and capital expenditure, so please give me $ 510000 instead of $ 500000. I think that purchaser will agree with you.



access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting interest international Internet Introduction of Tally 9 inventory investment invoice IT Japan Job costing journal entries keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting otcei pakistan parents pay pal pdf pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching wikipedia working capital youtube
Accounting Education: Solution of Financial Accounting Problem
Solution of Financial Accounting Problem
Accounting Education
Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock