TAKULAH Traders Ltd purchased a machine for $650 000 and there was an accumulated depreciation balance...

TAKULAH Traders Ltd purchased a machine for $650 000 and there was an accumulated depreciation balance of $110 000 at 30 June 2022. Its fair value is assessed at this time, with its first revaluation as $450 000. The machine’s useful life is expected to be 5 more years and the residual value to be $50 000. On 1 July 2023 the asset’s fair value is $460 000 and the residual value and useful life are expected to be unchanged (that is, there is 4 years of remaining life).

Expert Solution

journal entries(REFER WORKING FOR CALCULATIONS)

30-06-2022	PROFIT AND LOSS A/C	DR	$ 90,000.00
	MACHINE A/C	CR		$ 90,000.00
	(BEING DOWNWARD REVALUATION RECORDED)

30-06-2023	DEPRECIATION A/C	DR	$ 80,000.00
	MACHINE A/C	CR		$ 80,000.00
	(BEING DEPRECIATION FOR THE YEAR ENDED 30/06/2023 RECORDED)

01-07-2023	MACHINE A/C	DR	$ 90,000.00
	PROFIT AND LOSS A/C	CR		$ 90,000.00
	(BEING UPWARD REVALUATION RECORDED)

30-06-2024	DEPRECIATION A/C	DR	$ 1,02,500.00
	MACHINE A/C	CR		$ 1,02,500.00
	(BEING DEPRECIATION FOR THE YEAR ENDED 31/06/2023 RECORDED)

WORKING
cost	GIVEN	$ 6,50,000.00
acc dep	GIVEN	$ 1,10,000.00
carrying value	A	$ 5,40,000.00	30-06-2022
fair value	B	$ 4,50,000.00	30-06-2022
downward revaluation	C=B-A	$ -90,000.00
residual value	D	$ 50,000.00
useful life	E	5.00	years
depreciation	F=(B-D)/E	80000	FOR(30/6/2023)
carrying value	G=B-F	$ 3,70,000.00	01-07-2023
fair value	H	$ 4,60,000.00
upward revaluation	I=H-G	$ 90,000.00
depreciation	J=(H-D)/4	$ 1,02,500.00	FOR (30/06/2024)
carrying value	K=H-J	$ 3,57,500.00	30-06-2024

ekkarill92 answered 1 year ago

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