Olympic Limited is a diversified industrial company with many different areas of operation.
The following information relates to the company’s property, plant and equipment. The company has a 30th September year end.
• All the plant was purchased and brought into use on 1 October 20X1 at a cost of C 800 000. The cost of testing the plant amounted to C 45 000 and samples manufactured while in the testing phase were sold for C 5 000. The useful life of the plant is estimated at five years and the residual value is estimated at C 40 000. At 30 September 20X4, similar items of plant of five years age are currently realising C 70 000. The production director, however, expects the entity to obtain C 100 000 on disposal. The entity applies the re-allocation method.
• The motor vehicle consists of a delivery van purchased on 1 October 20X3 at a cost of C 270 000. The useful life is estimated at four years and the residual value is estimated at CO. At 30 May 20X4, the tyres of the delivery van are replaced with tyres of a better quality. The new tyres cost C 24 000 and have an estimated useful life of two years. It is estimated that the original tyres cost C 12 000. Costs of servicing the delivery van during the year amounted to C 12 500.
• A helicopter was purchased on 1 October 20X0 at a cost of C 1 500 000. The following components were identified:
Engines &rotar blades
In order to maintain the operating license for the helicopter, inspections are required to be performed every three years on the anniversary of the purchase date. The cost of the inspection at 1 October 20X3 amounted to C 240,000.
• A photocopy machine was purchased for the office at a total cost of C 280 000 and delivered to the premises of Olympic Limited on 15 January 20X4. The machine needed to be installed by a technician and this was completed by 31 January 20X4. The machine was available for use on this date. However, management decided not to use the machine until 1March 20X4 as an existing photocopy machine was on lease until that date. Use of the machine began on 1 March as planned and the machine was used continuously throughout the financial year except for the month of August 20X4 when a new high tech machine was given to Olympic Limited on a trial basis. The useful life of the machine is estimated at 3 years and the residual value is estimated at C 40 000.
• The normal tax rate has remained at 30% throughout the periods under review.
Prepare al! the journal entries relating to the property, plant and equipment of Olympic Limited for the year ended 30 September 20X4.