Reference no: EM132623586
The asset schedule extract of Bilby Ltd shows the following details for its machinery as at 30 June 2019. The machinery has been accounted for using the revaluation model.
Machine A (Alvino) Machine B (Bing)
$ $
Revalued amount 90,000 30,000
Accumulated depreciation - -
Carrying amount 90,000 30,000
As an accountant of Bilby Ltd, you are asked for account for the subsequent measurement of the machinery for the years ended 30 June 2020 and 2021. More information about these machines is provided below.
Machine A - Alvino
This machine was revalued for the first time on 30 June 2019, from $100,000 to $90,000. The directors determined that as at 30 June 2019, this machine had an estimated remaining useful life of 4 years, and an estimated residual value of $15,000.
The directors have determined that the fair value of this equipment on 30 June 2020 is $82,500. At 30 June 2020, this machine had an estimated remaining useful life of 3 years, and the residual value remains unchanged at $15,000.
The directors have determined that the fair value of this machine on 30 June 2021 is $66,000.
Machine B - Bing
This machine has been revalued a number of times, with revaluation decrements amounting to $1,500 being previously recognised in profit or loss. The directors determined that as at 30 June 2019, this machine was valued at $30,000 with an estimated remaining useful life of 4 years, and an estimated residual value of $6,000.
The directors have determined that the fair value of this machine on 30 June 2020 is $27,000. At 30 June 2020, this machine had an estimated remaining useful life of 3 years, and the residual value has been revised to $9,000.
This machine is sold on 31 December 2020 for $19,500
Required:
Problem 1: Prepare the necessary journal entries for the years ending 30 June 2020 and 30 June 2021 to record the depreciation, revaluations and disposal for the machinery in accordance with AASB 116 Property, Plant and Equipment. Show all relevant workings. Ignore any tax effect.