Q1. Presented below are the components related to an office
building that ABC Company is considering purchasing for
SAR10,000,000.
Component
Useful
Life
Value
Building structure
60-year life
5,400,000
Building engineering
30-year
life
2,400,000
Building external works
30-year
life
900,000
Instructions: (2 marks)
(a) Compute depreciation expense for 2010, assuming that
ABC uses component depreciation.
(b) Assume that the building engineering was replaced in 20
years at a cost of SAR 2,600,000 cash. Prepare the entry
to record the replacement of the old component with the
new component.
Answer:
Q2. a. Explain impairment of long-lived tangible.
b. The accountant of X. Ltd conducted an impairment test on a
machinery. The carrying amount of machinery was SAR
195,000, its fair value less costs to sell is SAR 170,000, and its
value-in-use is SAR 165,000. Is there impairment or no
impairment on machinery? If impairment exists what would be
the journal entry. (2 Mark)
Answer:
Q3. List the classified Intangible Assets with examples. (2
Marks)
Answer