Diamond Ltd acquired an item of polishing equipment on 1 July 2015 for $440,000. The equipment isexpected to have a useful life of 10 years and the straight-line method of depreciation is to be used.It has salvage value of $40,000. On 1 July 2017, the equipment is deemed to have a fair value of$424,000 and revaluation is undertaken in accordance with the Diamond Ltd policy of measuringproperty, plant and equipment at fair value. The asset is still usable for next 8 years but the salvagevalue is determined to be zero. The asset is sold for $356,000 on 1 July 2019.Required:Provide the journal entries necessary at the following dates to account for the above transactions andevents. (Ignore narrations). Show your workin• 01/07/2015• 01/07/2017• 01/07/2019

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Answered: Diamond Ltd acquired an item of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lockard Company purchased machinery on January 1, 2017, for $80,000. The machinery is estimated to have a salvage value of $8,000 after a useful life of 8 years. (a) Compute 2017 depreciation expense using the sum-of-the-years’-digits method. (b) Compute 2017 depreciation expense using the sum-of-the-years’-digits method, assuming the machinery was purchased on April 1, 2017.
Diamond Ltd acquired an item of polishing equipment on 1 July 2015 for $440,000. The equipment isexpected to have a useful life of 10 years and the straight-line method of depreciation is to be used.It has salvage value of $40,000. On 1 July 2017, the equipment is deemed to have a fair value of$424,000 and revaluation is undertaken in accordance with the Diamond Ltd policy of measuringproperty, plant and equipment at fair value. The asset is still usable for next 8 years but the salvagevalue is determined to be zero. The asset is sold for $356,000 on 1 July 2019.Required:Provide the journal entries necessary at the following dates to account for the above transactions andevents. (Ignore narrations). Show your workings. 01/07/2015 01/07/2017 01/07/2019
vvv Limited purchased a machine for $300,000 cash on 1 July 2005. The useful life of the machine is 10 years, no residual value and straight line method for depreciation. The company uses the revaluation model. On 31 December 2005, the fair value was $332,500 for the machine. On 31 December 2006, the fair value was $280,500 for the machine. The machine has a fair value of $302,250 on 31 December 2007 and $250,950 on 31 December 2008. Required: Provide the journal entries related to machine.
Lockard Company purchased machinery on January 1, 2017, for $80,000. The machinery is estimated to have a salvage value of $8,000 after a useful life of 8 years. (a) Compute 2017 depreciation expense using the straight-line method. (b) Compute 2017 depreciation expense using the straight-line method assuming the machinery was purchased on September 1, 2017.
Merca Inc. has provided the auditors with the ff. information: - A patent was purchased on January 1, 2015 from Seagull Co. for 6,000,000. Estimated useful life is 10 years. The patent had a net book value of P6,000,000 when Merca bought it from Seagull. Because of recent events, Merca decides that a change in estimated useful life of intangible assets is necessary. Therefore on January 1, 2016, the remaining useful life of the patent purchased on January 1, 2015, is only 5 years from January 1, 2016. -A franchise was purchased on February 1, 2016 for P1,440,000. The contract was for 20 years and terms include 5% revenue from franchise must be paid to the franchisor. Revenue for 2016 was P7,500,000. -The ff. research and development costs were incurred by Merca in 2016: Materials and equipment 426,000 Personnel 567,000 Indirect costs 306,000 1. On December 31, 2016, the carrying amount of the patent should be: a. 4,320,000 b. 4,920,000 c. 4,800,000 d. 4,400,000 2.…
Norfolk Plc., an IFRS reporter, is revaluing equipment with a carrying value of £984,500 to its fair value of £964,500. The original cost of the equipment was £1,400,000. The equipment has a 10-year useful life and scrap value of £15,000. Norfolk uses straight-line depreciation. Assume that Norfolk eliminates all prior accumulated depreciation and adjusts the historical cost to fair value. a. What is the revaluation surplus or unrealized loss? b. Where does the firm report the revaluation surplus or unrealized loss in the financial statements? c. What are the journal entries to record the revaluation? d. What is the depreciation expense on the equipment after the revaluation? e. Norfolk chooses to take any revaluation surplus to retained earnings over the equipment's remaining useful life. What is the amount of the surplus, if any, taken to retained earnings in the year after revaluation? f. If Norfolksells the equipment at the end of…

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