On 1 July 2016, Kingdom Ltd acquired two assets within the same class of plant and equipment, Information on these assets is as follows:

The machines are expected to generate benefits evenly over their useful lives. The class of plant and equipment is measured using fair value.
At 30 June 2017, Information about the assets is as follows:

On 1 January 2018, Machine B was sold for $29,000 cash. On the same day, Kingdom Ltd acquired Machine C for $80,000 cash. Machine C has an expected useful life of 4 years. Kingdom Ltd also made a bonus issue of 10,000 shares at $1 per share, using $8000 from the general reserve and $20,000 from the asset revaluation surplus created as a result of measuring Machine A as fair value.
At 30 June 2018, information on the machine is as follows:

The income tax rate is 30%.
Required:
Prepare the journal entries in the records of Kingdom Ltd to record the described events over the period 1 July 2016 to 30 June 2018, assuming the ends of the reporting periods are 30 June 2017 and 30 June 2018.

Transcribed Image Text:

Expected useful life Cost $100 000 Machine A Machine B 5 years З years Machine A Machine B Fair value $84 000 38 000 Expected useful life 4 years 2 years