I have been doing some past exam papers and one of the questions asks how would you treat the following items in the financial statement. Im unclear on this, and have got a few hints from my tutor but still dont know how to answer this. Can anyone please help. How would you treat the following items, what is the concept of related party transactions?
Thanks.
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State, giving reasons, the accounting treatment of the following items in the financial statements of Yeats Ltd. as at 31 July 2005:
1. A vintage motor car that has been depreciated to a book amount of £1. The Board of Yeats Ltd. has decided to sell the car within the next twelve months to the Marketing Director for £1. The current market value of the car has been estimated at £1.25m by independent expert valuers, -
2. A barge bought by the company for £1,000 that has been extensively refurbished at the company’s expense. The current market value of the item has been estimated at £125,000 by independent expert valuers. The barge was sold to the company’s Marketing Director for £1,500 on 31 July 2005, but the money has not yet been received by the company, -
3. An invoice, paid in the year, for £27,500 from Sunny Conservatories Ltd for ‘factory repairs’. Inquiries have established that the invoice is actually for a conservatory installed at the private residence of the Marketing Director. –
(For the following question the tutor told me to look at prudence concept)
State, giving reasons, which of the following items should appear as a fixed asset (and, where applicable, the amount at which they should appear) in the balance sheet of Tiburtina Ltd. as at 31 May 2004:
A diamond mine that cannot currently be operated since it is situated in an African war zone: however, the directors believe that American intervention in the next three to six months will result in the mine becoming viable once more. The mineshaft and associated specialist plant and machinery were acquired for £5m.
Thanks.
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State, giving reasons, the accounting treatment of the following items in the financial statements of Yeats Ltd. as at 31 July 2005:
1. A vintage motor car that has been depreciated to a book amount of £1. The Board of Yeats Ltd. has decided to sell the car within the next twelve months to the Marketing Director for £1. The current market value of the car has been estimated at £1.25m by independent expert valuers, -
2. A barge bought by the company for £1,000 that has been extensively refurbished at the company’s expense. The current market value of the item has been estimated at £125,000 by independent expert valuers. The barge was sold to the company’s Marketing Director for £1,500 on 31 July 2005, but the money has not yet been received by the company, -
3. An invoice, paid in the year, for £27,500 from Sunny Conservatories Ltd for ‘factory repairs’. Inquiries have established that the invoice is actually for a conservatory installed at the private residence of the Marketing Director. –
(For the following question the tutor told me to look at prudence concept)
State, giving reasons, which of the following items should appear as a fixed asset (and, where applicable, the amount at which they should appear) in the balance sheet of Tiburtina Ltd. as at 31 May 2004:
A diamond mine that cannot currently be operated since it is situated in an African war zone: however, the directors believe that American intervention in the next three to six months will result in the mine becoming viable once more. The mineshaft and associated specialist plant and machinery were acquired for £5m.