For the end of Robbie Ltd's financial year June 30 th 2019, the event below needs to
Question:
For the end of Robbie Ltd's financial year June 30th 2019, the event below needs to be fixed. No adjusting entries have been prepared yet for the accounting period. If a depreciable asset was purchased and it becomes available for use on the 16th of that month or earlier, the business depreciates for all of the month. However, when it is available for use later than the 16th, then depreciation will begin on the 1stof the next month. The historical cost model is used for all Property, Plant and Equipment of Robbie Ltd. GST can be Ignored.
Robbie Ltd purchased machinery on the 11th Sept. 2018, for $48,000 that had already been used by another business. The cost was posted with a debit to the Machinery account. Prior to its use, cash was used to pay for repairs to the used machinery which cost $4,200. In addition, installing the machinery cost $3,000. These events were posted with a debit to the Repairs and Maintenance Expense. The installation and machinery repairs were completed on 5th Oct. 2018, after this, the machinery became available for use to the business for the first time since purchase. The useful life of 5 years begins from the date that it becomes available for business use. In addition, the residual value was given an estimate of $4,000. The declining balance depreciation method is used and is, calculated at 2 times the rate of the straight-line depreciation method.
prepare adjusting and correcting journal entries that are necessary.
Financial Accounting and Reporting a Global Perspective
ISBN: 978-1408076866
4th edition
Authors: Michel Lebas, Herve Stolowy, Yuan Ding