Financial Accounting / ACCT 201

College of Administration and Finance Sciences

Assignment (2)
Deadline: Saturday 23/11/2024 @ 23:59
Course Name: Financial Accounting

Student’s Name:

Course Code: ACCT 201

Student’s ID Number:

Semester: First

CRN:
Academic Year: 1446 H (2024-25)

For Instructor’s Use only
Instructor’s Name: DR ASHFAQUE AHMED
Students’ Grade:
/15
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.

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College of Administration and Finance Sciences

Assignment Questions:

(Marks 15)

Q1. Al Khaleej Corporation purchased a new machine on January 1st, 2010. The cost of this
machine was $200,000. The company estimated that the machine would have a salvage value of
$20,000 at the end of its service life. Its life is estimated at 5 years and its working hours are
estimated at 40,000 hours.

(5 Marks)

Calculate deprecation expenses, accumulated depreciation, and book value of the machine for each of
the year using:
i.

Straight Line Method

ii.

Declining balance method (Based on twice the straight-line rate)

iii.

Activity Method if Al Khaleej Corporation uses the machine hours as follows:
Year

Hours used

2010

7,000

2011

8,500

2012

8,000

2013

9,000

2014

7,500

You can use following table to present your answer: (specimen format / table)
Year

Answer:

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Depreciation Expense

Accumulated Depreciation

Book Value

College of Administration and Finance Sciences

Q2.

Riyadh Manufacturing Company exchanged equipment used in its manufacturing
operations plus $4,500 in cash for similar equipment used in the operations of Medina.
Manufacturing Company. The following information pertains to the exchange:
(5 Marks)
Riyadh Manufacturing

Medina Manufacturing

Equipment (cost)

$63,000

$63,000

Accumulated Depreciation

42,750

22,500

Fair value of equipment

30,375

34,875

Cash given up

4,500

Required:
i. Calculate gain or loss on exchange.
ii. Prepare the journal entries to record the exchange on the books of both companies when:
a) Riyadh Manufacturing has commercial substance.
b) Riyadh Manufacturing lacks commercial substance
c) Medina Manufacturing has commercial substance.
d) Medina Manufacturing lacks commercial substance
Answer:

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College of Administration and Finance Sciences

Q3. Presented below are the components related to an office building that Jeddah construction
Company is considering purchasing for SAR10,000,000.

Component

Useful Life

Value

Building structure

60-year life

5,400,000

Building engineering

30-year life

2,400,000

Building external works

30-year life

900,000

Instructions
(a) Compute depreciation expense for 2010, assuming that Jeddah construction uses
component depreciation. ( 2.5 marks)
(b) Assume that the building engineering was replaced in 20 years at a cost of SAR2,600,000.
Prepare the entry to record the replacement of the old component with the new component.
(2.5 marks)
Answer to Q3

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