Following is the trial balance of Xemco for the year ending 30 September 2013.
|Cost of sales||134,000|
|Contract to construct asset||4,000|
|Land ($12 million) and building ($48 million) at cost (note (i))||60,000|
|Owned plant and equipment at cost (note (i))||65,700|
|Leased plant at initial carrying amount (note (i))||35,000|
|Accumulated depreciation at 1 October 2012:|
|owned plant and equipment||17,700|
|Inventory at 30 September 2013||26,600|
|Equity shares of 20 cents each||45,800|
|Retained earnings at 1 October 2012||31,400|
(i) No depreciation has been charged on the property plant and equipment for the year. Building should be depreciated using 20 years life on the original cost. Owned plant should be depreciated using 20% reducing balance method and leased plant should be depreciated using 10 years life on the initial carrying amount. Depreciation is charged in Cost of goods sold.
(ii) Estimated tax for the year is $200,000