Kmart Ltd is preparing its end of year financial statements at 30 June 2020. Kmart Ltd recently purchased Premises to use as its central warehouse distribution centre in Melbourne from where is handles on-line sales. At the time the residual was $24,000,000. Kmart Ltd uses the straight-line method of depreciation and the revaluation model for recording Premises. At 30 June 2019 the carrying amount of the Premises was $38,400,000 At 30 June 2020 the fair value of the Premises was $42,000,000 There was a downward revaluation of the Premises by $2,400,000 last year The remaining useful life of the Premises at 30 June 2019 was 16 years Required Prepare general journal entries for the Premises for the year ended 30 June 2020. Justify your answer according to AASB 116
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Kmart Ltd is preparing its end of year financial statements at 30 June 2020.
Kmart Ltd is preparing its end of year financial statements at 30 June 2020.
Kmart Ltd recently purchased Premises to use as its central warehouse distribution centre in Melbourne from where is handles on-line sales. At the time the residual was $24,000,000. Kmart Ltd uses the straight-line method of
At 30 June 2019 the carrying amount of the Premises was $38,400,000
At 30 June 2020 the fair value of the Premises was $42,000,000
There was a downward revaluation of the Premises by $2,400,000 last year
The remaining useful life of the Premises at 30 June 2019 was 16 years
Required
Prepare general
Step by step
Solved in 2 steps
