Prepare the journal entries to record the events

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Reference no: EM132823355

Question - Boon Leong Ltd (BLL) operates in a very competitive field. To maintain its market position, it purchased two new machines for cash on 1 January 2016. It previously rented machines. Machine A cost $50,000 and machine B cost $80,000. Each machine was expected to have a useful life of 10 years, and residual values were estimated at $4,000 for machine A and $8,000 for machine B. BLL's owner measured the machines using the cost model and uses the straight-line method to account for depreciation. On 26 June 2018 Machine B was sold for $60,000.

On 30 June 2018 BLL's owner decided to change the basis of measuring the machines to the revaluation model. No changes to the estimates of residual value or useful life were made. Fair values at 30 June 2018 were assessed at $40,000 for machine A.

Required - Prepare the journal entries to record the above events and depreciation from the 1st January 2016 to 30th June 2018.

Reference no: EM132823355

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