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 |
| 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
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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