Question: The following are transactions related to Producers
The following are transactions related to Producers Limited:
1. The City of Piedmont gives the company five hectares of land as a plant site. This land’s fair value is determined to be $92,000.
2. Producers issues 13,000 common shares in exchange for land and buildings. The property has been appraised at a fair value of $1,630,000, of which $407,000 has been allocated to land, $887,000 to the structure of the buildings, $220,000 to the building HVAC (heating, ventilation, air conditioning), and $116,000 to the interior coverings in the buildings (such as flooring). Producers’ shares are not listed on any exchange, but a block of 100 shares was sold by a shareholder 12 months ago at $57 per share, and a block of 200 shares was sold by another shareholder 18 months ago at $33 per share.
3. No entry has been made to remove amounts for machinery constructed during the year that were charged to the accounts Inventory, Supplies, and Salaries and Wages Expense and should have been charged to plant asset accounts. The following information relates to the costs of the machinery that was constructed:
Instructions:
(a) Prepare journal entries on the books of Producers Limited to record these transactions. Assume that Producers Limited prepares financial statements in accordance with IFRS.
(b) Determine how your answer in (a) would change if Producers follows ASPE.
Transcribed Image Text:
$23,000 625 Construction materials on hand in opening inventory used Direct materials used in calibrating the equipment Factory supplies used Direct labour incurred 980 56,000 Additional variable overhead (over regular) caused by construction of machinery, excluding factory supplies used (charged to Inventory) Fixed overhead rate applied to regular manufacturing operations Lost revenue due to downtime during construction Cost of similar machinery if it had been purchased from outside suppliers 8,700 70% of direct labour cost 45,000 125,000
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