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Prepare the journal entries necessary to revalue equipment

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Reference no: EM132957043

As at 30 June 2020 Timmy Ltd had the following balances for equipment before preparing end of year adjustments:

Equipment (at fair value) $85,000
Accumulated depreciation - equipment (10,000)

  • The equipment is measured using the revaluation model. Timmy Ltd performs revaluations on the equipment every two (2) years. The equipment was last revalued on 30 June 2018, whereby a loss on revaluation of $3,000 was recorded in profit for the year. As of 30 June 2018, the equipment had a remaining useful life of 8 years and a residual value of $5,000.
  • On 30 June 2020 Timmy Ltd obtained a fair value for the equipment at $73,000. Depreciation expense on the equipment for 30 June 2020 has not yet been recorded. The tax rate is 30%.

Required:

Problem 1: Prepare the journal entries necessary to revalue the equipment on 30 June 2020. Show all working out.

Reference no: EM132957043

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