A company’s annual report as at 31 December 2019 showed equipment part as follows:

Equipment (cost)	$1,000,000
Accumulated Depreciation	300,000
	700,000

The equipment consisted of two machines.

Machine 1  

Cost $ 600,000

Carrying amount 360,000

Machine 2.

Cost $ 400,000

Carrying amount 340,000

Both machine are measured using the cost model, and depreciated on a straight line basis over a 10 year period.

On 30 June 2020, the management decided to change the basis of measuring the equipment from the cost model to the revaluation model.

Machine 1 was revalued to $ 360,000 with an expected useful life of 6 years.

Machine 2 was revalued to $ 310,000 with an expected useful life of 5 years.

As of 31 December 2020:

Machine 1 had a fair value of $326,000 with an expected useful life of 5 years

Machine 2 had a fair value of $ 273,000 with an expected useful life of 4 years

Tax rate was 30%

Required:

Prepare journal entries during period 1 July 2020 to 31 December 2020 in relation to the equipment

Answer rating: 100% (QA)

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