Questions:
The questions to be answered are:
1. In accounting for the acquisition of assets, the assets acquired are to be recorded at the ‘cost of acquisition’. How would you determine the ‘costs of acquisition’ of an asset?
2. How are changes in accounting policies accounted for and disclosed?
3. Following information relate to Hawke Ltd for the financial year ended 2020 Hawke Ltd Statement of Financial position As at 30 June 2020 2020 2019 Assets Cash at bank 84200 100000 Accounts receivable 208000 172000 Inventory 200000 208000 Prepaid insurance 12000 20000 Interest receivable 400 600 Investments 80000 40000 Plant and equipment 800000 720000 Less: Accumulated depreciation -200000 -180000 Total assets 1184600 1080600 Liabilities Accounts payable 152000 128000 Provision for employee benefits 24000 16000 Other expenses payable 8000 12000 Equity Share capital 800000 800000 Retained earnings 200600 124600 Total liabilities and equity 1184600 1080600 Hawke Ltd Statement of Financial performance For the period ended 30 June 2020 2020 Income Sales revenue $1,920,000 Interest revenue on investments $4,000 $1,924,000 Less: Expenses Cost of sales $1,344,000 Employee expenses $260,000 Insurance expense $32,000 Loss on sale of equipment $8,000 Depreciation expense – plant and equipment $80,000 Other expenses $44,000 $1,768,000 Profit for the year $156,000 Additional information The loss on sale of equipment relates to an item that originally cost $80 000 and had a carrying amount of $20000 when sold.
Required:
Calculate the following: Cash collected from customers Cash paid to suppliers Cash paid to employees for wages and salary Cash spent on plant and equipment Proceeds from sale of equipment Cash paid for insurance
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