On the 30 June 2022, Wombat Ltd had the following machines: Cost Carrying amount Machine A $150
Question:
On the 30 June 2022, Wombat Ltd had the following machines:
Cost |
Carrying amount |
|
Machine A |
$150 000 |
$90 000 |
Machine B |
$100 000 |
$85 000 |
Both machines are measured using the cost model and depreciated on a straight-line basis over a 10-year period.
On 31 December 2022, the directors of Wombat Ltd decided to change the basis of measuring the equipment from the cost model to the revaluation model and obtained the following information:
Fair value |
Revised remaining useful life |
|
Machine A |
$90 000 |
6 |
Machine B |
$77 500 |
5 |
On 30 June 2023, the Wombat Ltd obtained the following information:
Fair value |
Revised remaining useful life |
|
Machine A |
$81 500 |
5 |
Machine B |
$68 250 |
4 |
Wombat Ltd has a reporting period ending 30 June. The tax rate is 30%. Depreciation is calculated to the nearest month and recorded to the nearest dollar.
Required:
Prepare the journal entries that Wombat Ltd should record for Machine A and Machine B for the following dates: 31 December 2022 and 30 June 2023.
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,