Vertonghen Ltd has various non-current assets, including Buildings and Machinery. The Buildings were purchased on 1 July 2009, have an anticipated residual value of $400,000 and an expected useful life of 20 years. The Buildings are being recorded under the revaluation model (AASB 116). The machinery was purchased on 1 July 2013. It has an anticipated residual value of $80,000 and an expected useful ife of 15 years. The machinery is being recorded under the cost model (AASB 136). Both assets are being depreciated using the straight-line method. An extract of the balance sheet at 1 July 2015 is provided below: Non-current Assets Buildings Less Accumulated Depreciation 750,000 (105,000) 645,000 Machinery Less Accumulated Depreciation 230,000 (20,000) Information relating to the assets at 30 June 2016 is: Machinery Value in Use Machinery Fair Value Costs to sell Machinery Buildings fair value Buildings Value in Use Costs to sell Buildings $197,000 $198,000 $2,000 $712,000 S713,000 $1,00 Information relating to the asset at 30 June 2017 is: Buildings fair value Buildings Value in Use Costs to sell Buildings $507,000 $509,000 $1,000 Required: Prepare the general journal entries for the ycar ended 30 June 2016 for both assets, taking into account the information provided above. Justify your answer and show all workings a) b) Prepare the general journal entries for the year ended 30 June 2017 for the Buildings. Justify your answer and show all workings.
Vertonghen Ltd has various non-current assets, including Buildings and Machinery. The Buildings were purchased on 1 July 2009, have an anticipated residual value of $400,000 and an expected useful life of 20 years. The Buildings are being recorded under the revaluation model (AASB 116). The machinery was purchased on 1 July 2013. It has an anticipated residual value of $80,000 and an expected useful ife of 15 years. The machinery is being recorded under the cost model (AASB 136). Both assets are being depreciated using the straight-line method. An extract of the balance sheet at 1 July 2015 is provided below: Non-current Assets Buildings Less Accumulated Depreciation 750,000 (105,000) 645,000 Machinery Less Accumulated Depreciation 230,000 (20,000) Information relating to the assets at 30 June 2016 is: Machinery Value in Use Machinery Fair Value Costs to sell Machinery Buildings fair value Buildings Value in Use Costs to sell Buildings $197,000 $198,000 $2,000 $712,000 S713,000 $1,00 Information relating to the asset at 30 June 2017 is: Buildings fair value Buildings Value in Use Costs to sell Buildings $507,000 $509,000 $1,000 Required: Prepare the general journal entries for the ycar ended 30 June 2016 for both assets, taking into account the information provided above. Justify your answer and show all workings a) b) Prepare the general journal entries for the year ended 30 June 2017 for the Buildings. Justify your answer and show all workings.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...
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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.
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Transcribed Image Text:Vertonghen Ltd has various non-current assets, including Buildings and Machinery. The
Buildings were purchased on 1 July 2009, have an anticipated residual value of $400,000 and an
expected useful life of 20 years. The Buildings are being recorded under the revaluation
model (AASB 116).
The machinery was purchased on 1 July 2013. It has an anticipated residual value of $80,000 and
an expected useful life of 15 years. The machinery is being recorded under the cost model
(AASB 136).
Both assets are being depreciated using the straight-line method.
An extract of the balance sheet at 1 July 2015 is provided below:
Non-current Assets
Buildings
Less Accumulated Depreciation
750,000
(105,000)
645,000
Machinery
Less Accumulated Depreciation
230,000
(20,000)
Information relating to the assets at 30 June 2016 is:
Machinery Value in Use
Machinery Fair Value
Costs to sell Machinery
Buildings fair value
Buildings Value in Use
Costs to sell Buildings
$197,000
S198,000
$2,000
S712,000
S713,000
$1,000
Information relating to the asset at 30 June 2017 is:
Buildings fair value
Buildings Value in Use
Costs to sell Buildings
$507,000
S509,000
$1,000
Required:
Prepare the general journal entries for the year ended 30 June 2016 for both assets, taking
into account the information provided above. Justify your answer and show all workings
a)
b)
Prepare the general journal entries for the year ended 30 June 2017 for the Buildings.
Justify your answer and show all workings.
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