PART 2: CALCULATION/PRACTICAL QUESTIONS
Q1. RECOVERABLE AMOUNT
Ipu Wens Construction LTD was forced to sell its trucks after a year due to the termination of
contruct via Mendi-Tambul road. Ipu Wens Construction LTD had
been using a 20 year, straight
line depreciation
method for these vehicles. The net book value
before discovering this
impairment in value was K1,000,000. The vehicle's
manufacturer found a buyer that was will
to pay K500,000 for Ipu Wens Construction LTD trucks
. Ipu Wens Construction LTD was also
required to pay K50, 000 to have the trucks transported
to this new owner.
Required:
1. Calculation (10 mrks)
2. What was the:
a) Depreciated amount after a year? (2mrks)
b) Fair Value? (2mrks)
c) Cost of Disposal? (2mrks)
d) Carrying Amount? (2mrks)
e) Impairment? (2mrks)
3. What is the RECOVERABLE AMOUNT?
4. Journal Entry (5marks)
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