Reference no: EM133157639

Question - On 1 July 2020, King Lid purchased land for $800,000 and buildings for $500,000. The estimated useful life of the buildings was 20 years, with a residual value of nil. On 1 October 2020, machinery was purchased at a total cost of $240,000. The estimated useful life of the machinery was 4 years with an estimated residual value of $18,000. King Lid uses straight-line depreciation for buildings and the diminishing-balance method for machinery at a rate of 40%. The entity's reporting period ends 30 June.

Required -

A. Prepare journal entries to record the purchase of the land, buildings and machinery during the year.

B. Prepare journal entries to record the depreciation expense for the year ended 30 June 2021.

C. Assume that on 1 July 2021 the entity re-valued the land upwards by $160,000 and the buildings downwards by $50,000. Prepare the journal entries for the revaluations.

D. On 31 December 2021, owing to a change in product mix, the machinery was sold for $80,000. Prepare journal entries to dispose of the machinery.