Background information Membina Limited ( Membina ) is a large, Melbourne - based construction company that specialises
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Background information Membina Limited Membina is a large, Melbournebased construction company that specialises in highrise developments. One of the assets that support Membinas highrise construction activities is a tower crane, which is used to lift heavy equipment and materials to great heights. Membinas heavy machinery is measured under the revaluation model in accordance with IAS Property, Plant and Equipment. The tower crane was originally purchased on July for $ It is being depreciated on a straightline basis over its useful life of years, after which time the residual value will be zero.
The value of tower cranes is not highly volatile, and Membina performs revaluations every three years. This is the first revaluation for Membinas tower crane. Membina has the following information about the three main secondhand markets available:
Brisbane Number of tower cranes sold annually :
Average number of sales per month :
Selling price for yearold tower crane at June :$
Sales commission as a of selling price at June :
Delivery costs by truck at June : $
Melbourne Number of tower cranes sold annually :
Average number of sales per month :
Selling price for yearold tower crane at June :$
Sales commission as a of selling price at June :
Delivery costs by truck at June : $
Sydney Number of tower cranes sold annually :
Average number of sales per month :
Selling price for yearold tower crane at June :$
Sales commission as a of selling price at June :
Delivery costs by truck at June : $
Additional information
The location of the tower crane in Melbourne is considered a characteristic of the asset.
In the past, Membina has sold its tower cranes in the Melbourne market as they are easier to sell locally. However, Membina can sell in any of the three markets Brisbane Melbourne or Sydney
The tax rate is
Using the fair value information in the Melbourne market, prepare the journal entryentries to record the revaluation of the tower crane at June Show all workings.
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Authors: Mark S Beasley, Frank A. Buckless, Steven M. Glover, Douglas F Prawitt
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