A company’s annual report as at 31 December 2019 showed equipment part as follows: Equipment (cost) $1,000,000 Accumulated Depreciation 300,000 700,000 The equipment consisted of two machines. Machine 1 Cost $ 600,000 Carrying amount 360,000 Machine 2. Cost $ 400,000 Carrying amount 340,000 Both machine are measured using the cost model, and depreciated on a straight line basis over a 10 year period. On 30 June 2020, the management decided to change the basis of measuring the equipment from the cost model to the revaluation model. Machine 1 was revalued to $ 360,000 with an expected useful life of 6 years. Machine 2 was revalued to $ 310,000 with an expected useful life of 5 years. As of 31 December 2020: Machine 1 had a fair value of $326,000 with an expected useful life of 5 years Machine 2 had a fair value of $ 273,000 with an expected useful life of 4 years Tax rate was 30% Required: Prepare journal entries during period 1 July 2020 to 31 December 2020 in relation to the equipment
A company’s annual report as at 31 December 2019 showed equipment part as follows:
|
Equipment (cost) |
$1,000,000 |
| Accumulated Depreciation | 300,000 |
| 700,000 |
The equipment consisted of two machines.
Machine 1
Cost $ 600,000
Carrying amount 360,000
Machine 2.
Cost $ 400,000
Carrying amount 340,000
Both machine are measured using the cost model, and depreciated on a straight line basis over a 10 year period.
On 30 June 2020, the management decided to change the basis of measuring the equipment from the cost model to the revaluation model.
Machine 1 was revalued to $ 360,000 with an expected useful life of 6 years.
Machine 2 was revalued to $ 310,000 with an expected useful life of 5 years.
As of 31 December 2020:
Machine 1 had a fair value of $326,000 with an expected useful life of 5 years
Machine 2 had a fair value of $ 273,000 with an expected useful life of 4 years
Tax rate was 30%
Required:
Prepare
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