Question

Harrier Ltd began operations on 1 July 2016. During the following year, the company acquired a tract of land, demolished the building on the land and built a new factory. Equipment was acquired for the factory and, in March 2017, the factory was ready. A gala opening was held on 18 March, with the local parliamentarian opening the factory. The first items were ready for sale on 25 March.

During this period, the following inflows and outflows occurred.

(a)		While searching for a suitable block of land, Harrier Ltd placed an option to buy with three real estate agents at a cost of $100 each. One of these blocks of land was later acquired.
(b)		Payment of option fees		$     300
(c)		Receipt of loan from bank		400,000
(d)		Payment to settlement agent for title search, stamp duties and settlement fees		10,000
(e)		Payment of arrears in rates on building on land		5,000
(f)		Payment for land		100,000
(g)		Payment for demolition of current building on land		12,000
(h)		Proceeds from sale of material from old building		5,500
(i)		Payment to architect		23,000
(j)		Payment to council for approval of building construction		12,000
(k)		Payment for safety fence around construction site		3,400
(l)		Payment to construction contractor for factory building		240,000
(m)		Payment for external driveways, parking bays and safety lighting		54,000
(n)		Payment of interest on loan		40,000
(o)		Payment for safety inspection on building		3,000
(p)		Payment for equipment		64,000
(q)		Payment of freight and insurance costs on delivery of equipment		5,600
(r)		Payment of installation costs on equipment		12,000
(s)		Payment for safety fence surrounding equipment		11,000
(t)		Payment for removal of safety fence		2,000
(u)		Payment for new fence surrounding the factory		8,000
(v)		Payment for advertisements in the local paper about the forthcoming factory and its benefits to the local community		500
(w)		Payment for opening ceremony		6,000
(x)		Payments to adjust equipment to more efficient operating levels subsequent to initial operation		3,300

Required
Using the information provided, determine what assets Harrier Ltd should recognise and the amounts at which they would be recorded.

Answer 1

While searching for a suitable block of land, Harrier Ltd placed an option to buy with three real estate agents at a cost of $100 each. One of these blocks of land was later acquired.		Land	Factory	Grounds imp	Equipment	Expenses
Payment of option fees	$     300	100.00				200.00
Receipt of loan from bank	400,000.00
Payment to settlement agent for title search, stamp duties and settlement fees	10,000.00	10,000.00
Payment of arrears in rates on building on land	5,000.00	5,000.00
Payment for land	100,000.00	100,000.00
Payment for demolition of current building on land	12,000.00	12,000.00
Proceeds from sale of material from old building	5,500.00	(5,500.00)
Payment to architect	23,000.00		23,000.00
Payment to council for approval of building construction	12,000.00		12,000.00
Payment for safety fence around construction site	3,400.00		3,400.00
Payment to construction contractor for factory building	240,000.00		240,000.00
Payment for external driveways, parking bays and safety lighting	54,000.00			54,000.00
Payment of interest on loan	40,000.00					40,000.00
Payment for safety inspection on building	3,000.00		3,000.00
Payment for equipment	64,000.00				64,000.00
Payment of freight and insurance costs on delivery of equipment	5,600.00				5,600.00
Payment of installation costs on equipment	12,000.00				12,000.00
Payment for safety fence surrounding equipment	11,000.00				11,000.00
Payment for removal of safety fence	2,000.00				2,000.00
Payment for new fence surrounding the factory	8,000.00				8,000.00
Payment for advertisements in the local paper about the forthcoming factory and its benefits to the local community	500.00					500.00
Payment for opening ceremony	6,000.00					6,000.00
Payments to adjust equipment to more efficient operating levels subsequent to initial operation	3,300.00				3,300.00
	1,020,300.00	121,600.00	281,400.00	54,000.00	105,900.00	46,500.00