What are the journal entries necessary at year-end

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On 1 January 2020, Chandler Company purchased equipment for £10,000. The sales tax on the purchase was £500. Other costs incurred were freight charges of £200, repairs of £1350 for damage during installation, and installation costs of £950. It is estimated that the equipment has a useful life of 6 years and it will be depreciated using the straight-line method of depreciation, and its residual value is £1,000. Chandler receives an independent appraisal for the fair value of the equipment on December 31, 2020, which is £11,450.

Required:

Problem a) Calculate the cost of the equipment at the purchase date.

Problem b) Record the journal entry at the date of purchase of the equipment.

Problem c) What are the journal entries necessary at year-end, assuming that Chandler chooses to use the revaluation model?

Reference no: EM132744664

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