Activity 2: Background InformationMembina Limited (Membina) is a large, Melbourne-based construction company that specialises inhigh-rise developments.One of the assets that support Membina's high-rise construction activities is a tower crane, which isused to lift heavy equipment and materials to great heights. Membina's heavy machinery ismeasured under the revaluation model in accordance with IAS 16 Property, Plant and Equipment.The tower crane was originally purchased on 1 July 2021 for $450,000. It is being depreciated on astraight-line basis over its useful life of 15 years, after which time the residual value will be zero.The value of tower cranes is not highly volatile, and Membina performs revaluations every threeyears. This is the first revaluation for Membina's tower crane. Membina has the followinginformation about the three main second-hand markets available:Number of tower cranes sold (annually)Average number of sales per monthSelling price for 3-year-old tower crane at 30 June 2024Sales commission (as a % of selling price) at 30 June 2024Delivery costs by truck at 30 June 2024Brisbane70012$389,00015%$75,000Melbourne1,50021$384,00011%$9,000Sydney2,10030$333,00012%$40,000Additional information- The location of the tower crane in Melbourne is considered a characteristic of the asset.In the past, Membina has sold its tower cranes in the Melbourne market as they are easier tosell locally. However, Membina can sell in any of the three markets (Brisbane, Melbourne orSydney).The tax rate is 30%.Required1. Identify and explain the market that Membina should use to measure the fair value of itstower crane. Support your answer with a specific reference from the relevant accountingstandard.2. Using the fair value information in the Melbourne market, prepare the journal entry/entriesto record the revaluation of the tower crane at 30 June 2024. Show all workings.

Required 1. Identify and explain the market that Membina should use to measure the fair value of its tower crane. Support your answer with a specific reference from the relevant accounting standard. 2. Using the fair value information in the Melbourne market, prepare the journal entry/entries to record the revaluation of the tower crane at 30 June 2024. Show all workings.

Required 1. Identify and explain the market that Membina should use to measure the fair value of its tower crane. Support your answer with a specific reference from the relevant accounting standard. 2. Using the fair value information in the Melbourne market, prepare the journal entry/entries to record the revaluation of the tower crane at 30 June 2024. Show all workings.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 10PC

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