Norwegian business economics Task 1

A company has invested in a bakery with a total investment framework of NOK 2,062,500 incl VAT. This amount includes assembly and training. The oven has a calculated scrap value after 7 years of NOK 390,000. a)

Calculate the depreciation basis for this baking oven based on whether the depreciation is linear or based on the balance method

Explain the concept of depreciation and why depreciation is a non-payable expense

b)

The machine has an economic life of 7 years and is depreciated on a straight-line basis.

What is the value of the machine at the end of the second year of operation and what is the depreciation this year?

c)

Depreciation can also be made according to the balance method with a depreciation rate of 14%.

What is the book value of the machine at the end of the first four years of operation and what is the annual depreciation during these years?

d)

Would it have been important for the annual depreciation if there had been no scrap value (residual value) on the oven?

Task 2

At the end of 2020, a company had inventories valued at NOK 1,500,000 and outstanding accounts payable of NOK 1,344,000. NOK 25,000 was also paid as an advance on salary for January

The following transactions related to sales and logistics took place in January and February 2021:

January:

• 03.01: Purchase of goods NOK 630,500 incl. VAT.
• 12.01: Salary payment NOK 240,000
• 17.01: Purchase of goods NOK 450,700 incl. VAT.
• 31.01: Total sales of goods in January amount to NOK 2,500,000 excl. VAT.

February: • 02.02: Purchase of goods NOK 664,000 incl. VAT.

• 12.02: Salary payment NOK 280,000 including NOK 15,000 advance on salary for March
• 28.02: Purchase of goods NOK 754,800 incl. VAT.
• 28.02: Total sales of goods in February amount to NOK 2,350,000 excl. VAT.
• 28.02: Listed value inventory NOK 1,600,000
• 28.02: Balance of accounts payable NOK 1,418,800

The value added tax (VAT) is 25%.

a)

What is the cost of goods for the period January and February 2021?

b)

How large payments have been made to the suppliers during January and February 2021?

c)

What are the wage costs for January and February 2021? Ignore employer contributions and holiday pay.

d)

Make the tax settlement (for VAT) for the first term 2021, provided that there are no other taxable transactions than those mentioned above.

The tasks (a-d) must be calculated together (January / February), and not set up for each month.