Question
On January 1, 2027, Atlas Ltd purchases production equipment for $300,000. Additional expenditures: transportation $10,000, installation $20,000, testing $5,000, staff training $15,000. The equipment is ready for use on March 1, 2027. Useful life: 8 years. Residual value: $25,000. Straight-line depreciation.
Required: Determine PPE cost and 2027 depreciation, and prepare one summary acquisition entry dated March 1, 2027 (when the equipment is ready for use) and the December 31, 2027 depreciation entry.
Statements in this challenge
- AcquisitionJournal Entry
- DepreciationJournal 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