Reference no: EM133176833
Question - a. On 1 July 2021, Mozart Ltd purchased three machines each used in a different production process in the factory. On 30 June 2022, there was an indication that the machines could be impaired due to a new competitor entering the market so Mozart Ltd determined the recoverable amounts of the machines. Information concerning the machines is summarised in the table below. Mozart Ltd uses straight-line depreciation over a 5 year period for all machinery. Assume that all three machines had nil residual values at the end of their useful lives.
|
Machine
|
Cost 1/7/21
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Value in Use 30/6/22
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Net Selling price 30/6/22
|
|
1
|
$10,000
|
$7,500
|
$9,000
|
|
2
|
$25,000
|
$13,000
|
$12,000
|
|
3
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$15,000
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$8,000
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$9,500
|
|
50,000
|
|
|
Required - 1) Record any depreciation for the year ended 30 June 2022.
2) Record any asset impairment at 30 June 2022.
b. Vivaldi had the following non-current asset balances in their general ledger at 31 December 2021.
Motor Vehicle at cost $33,000
Land at cost 150,000
The following transactions occurred during 2022.
June 30 Sold the motor vehicle that was purchased on 1 January 2019 for $33,000. It has a useful life of 6 years with no residual value. The vehicle was sold for $15,000 cash.
July 1 Revalued land held at cost of $150,000 to its fair value of $170,000.
Dec 31 The fair value of the land $170,000 has fallen due to a re-zoning of the area. Vivaldi Ltd decides to revalue the land to its revised fair value of $135,000.
Required - Prepare the general journal entries required to record the transactions that occurred during 2022. Assume depreciation has been recorded up to 31 December 2021. Mozart Ltd uses straight-line depreciation.