Reference no: EM132493152
On 1 July 2018 PHD Ltd purchased land for $3 000 000. PHD Ltd uses the cost model to account for land.
Point 1: On 1 July 2018 PHD Ltd purchased equipment for $2 000 000. PHD Ltd uses the revaluation model to account for equipment and depreciates the asset over its estimated useful life of 4 years using the straight-line method. The disposal value at the end of 4 years was assessed as zero.
The following information concerning asset measurement was available:
30/6/2019
Fair Value Costs to Sell Value in Use
Land 2 500 000 200 000 2 400 000
Equipment 1 200 000 nil 1 300 000
30/6/2020
Land 2 400 000 150 000 2 400 000
Equipment 700 000 nil 750 000
- Indicators of impairment and/or reversal of impairment existed at relevant dates.
REQUIRED:
Question 1: Prepare journal entries to account for PHD's land and equipment from 1 July 2018 to 30 June 2020.
Question 2: Journal entries SHOULD comply with AASB 116 'Property, Plant and Equipment' and AASB 136 'Impairment of Assets'.