Question
A building contains a major component with original cost $80,000 and accumulated depreciation $50,000. The component is replaced for $110,000 on January 1, 2027. The old component is identifiable separately in the accounting records.
Required: Determine the accounting entries.
Statements in this challenge
- Derecognize Old ComponentJournal Entry
- Recognize ReplacementJournal Entry
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
How to approach this
IAS 1 — Presentation of Financial Statements
A composite challenge links several statements built from one set of data, so figures flow between them: profit reaches retained earnings, and the closing balances feed the position statement. Complete them in the order the statements depend on each other rather than the order of the tabs.
Common mistakes
- Preparing each statement independently, so the linking figures disagree.
- Carrying a figure forward before finishing the adjustments that change it.
- Reworking a linked figure in one statement without updating it in the others.
Further readingIAS 1: what goes where in a full set of statements