Explain the cost model and the revaluation model

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High Tea Ltd acquired two assets on 1 July 2017, within the same class of machine. On the date of acquisition: Acquisition Cost Expected useful life Machine A $ 100 000 5 years Machine B 60 000 3 years The machines were expected to generate benefits evenly over their useful lives. The class of machine is measured using fair value. On 30 June 2018: Fair value Expected useful life Machine A $ 84 000 4 years Machine B 38 000 2 years On 1 January 2019, machine B was sold for $29 000 cash. On 30 June 2019 Fair value Expected useful life Machine A $ 61 000 3 years The reporting date is 30 June. The income tax rate is 30%.

Required:

Problem 1: Prepare the journal entries to record the transactions and events described above. Explain the cost model and the revaluation model.

Reference no: EM132907549

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