Jordan Ltd acquired a new equipment on 1 July 2019 for $130,000 cash. The equipment has...

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Jordan Ltd acquired a new equipment on 1 July 2019 for $130,000 cash. The equipment has an estimated useful life of 10 years and $10,000 residual value. On 30 June 2020, that equipment's fair value is $154,000. On 30 June 2021, there was no revaluation required. Jordan Ltd also purchased a new motor vehicle for cash on 1 July 2019 for $120,000. At this date the accountant determined the motor vehicle has a useful life of 4 years and an estimated residual value of $20,000. On 30 June 2020, there was no impairment recorded. On 30 June 2021, the motor vehicle had a value in use of $60,000 and the fair value less costs to sell was $58,000. Jordan Ltd uses the straight-line method to depreciate both assets. Required: a. Prepare the general journal entries for the financial years ending 30 June 2020 and 30 June 2021 related to the equipment assuming the asset is recorded under the fair value model. Justify your answer in accordance with appropriate accounting standards regarding the test of materiality. Narrations are NOT required. Date Descriptions Debit S Credit $ 1 July 2019 Equipment 130 000 Cash 130 000 30 June 2020 Depreciation Expense 12 000 Accumulated Depreciation - Equipment 12.000 Required: a. Prepare the general journal entries for the financial years ending 30 June 2020 and 30 June 2021 related to the equipment assuming the asset is recorded under the fair value model. Justify your answer in accordance with appropriate accounting standards regarding the test of materiality. Narrations are NOT required. Date Descriptions 1 July 2019 Equipment Cash 30 June 2020 Depreciation Expense Debit S Credit $ 130 000 130 000 12.000 12 000 Accumulated Depreciation - Equipment Materiality test for the difference between carrying amount and fair value CA Cost-Accumulated Depreciation - Accumulated Impairment = 130 000 - 12 000 = 118 000 FV 154 000 Difference 154 000-118 000 36 000 36 000/154 000-23.38% >10% affect decision marking material revalue the equipment 30 June 2020 Accumulated Depreciation - Equipment 12 000 Equipment (2) 12 000 30 June 2020 Equipment 36 000 Revaluation Surplus 36 000 30 June 2021 Depreciation Expense 16 000 Accumulated depreciation - Equipment 16.000 b. Prepare the general journal entries for the financial years ending 30 June 2020 and 30 June 2021 related to the motor vehicle assuming the asset is recorded under the cost model. Date Descriptions 1 July 2019 Motor Vehicle Cash 30 June 2020 Depreciation Expense Debit $ Credit $ 120 000 120 000 25 000 Accumulated Depreciation - MV 25 000 30 June 2021 Depreciation Expense 25 000 Accumulated Depreciation -MV 25 000 30 June 2021 Impairment Loss 10 000 Accumulated Impairment - MV 10 000 = **CA 120 000 - 25 000 - 25 000 = 70 000 **RA = higher of (FV - Cost to sell) and value in use = 60 000 4 Jordan Ltd acquired a new equipment on 1 July 2019 for $130,000 cash. The equipment has an estimated useful life of 10 years and $10,000 residual value. On 30 June 2020, that equipment's fair value is $154,000. On 30 June 2021, there was no revaluation required. Jordan Ltd also purchased a new motor vehicle for cash on 1 July 2019 for $120,000. At this date the accountant determined the motor vehicle has a useful life of 4 years and an estimated residual value of $20,000. On 30 June 2020, there was no impairment recorded. On 30 June 2021, the motor vehicle had a value in use of $60,000 and the fair value less costs to sell was $58,000. Jordan Ltd uses the straight-line method to depreciate both assets. Required: a. Prepare the general journal entries for the financial years ending 30 June 2020 and 30 June 2021 related to the equipment assuming the asset is recorded under the fair value model. Justify your answer in accordance with appropriate accounting standards regarding the test of materiality. Narrations are NOT required. Date Descriptions Debit S Credit $ 1 July 2019 Equipment 130 000 Cash 130 000 30 June 2020 Depreciation Expense 12 000 Accumulated Depreciation - Equipment 12.000 Required: a. Prepare the general journal entries for the financial years ending 30 June 2020 and 30 June 2021 related to the equipment assuming the asset is recorded under the fair value model. Justify your answer in accordance with appropriate accounting standards regarding the test of materiality. Narrations are NOT required. Date Descriptions 1 July 2019 Equipment Cash 30 June 2020 Depreciation Expense Debit S Credit $ 130 000 130 000 12.000 12 000 Accumulated Depreciation - Equipment Materiality test for the difference between carrying amount and fair value CA Cost-Accumulated Depreciation - Accumulated Impairment = 130 000 - 12 000 = 118 000 FV 154 000 Difference 154 000-118 000 36 000 36 000/154 000-23.38% >10% affect decision marking material revalue the equipment 30 June 2020 Accumulated Depreciation - Equipment 12 000 Equipment (2) 12 000 30 June 2020 Equipment 36 000 Revaluation Surplus 36 000 30 June 2021 Depreciation Expense 16 000 Accumulated depreciation - Equipment 16.000 b. Prepare the general journal entries for the financial years ending 30 June 2020 and 30 June 2021 related to the motor vehicle assuming the asset is recorded under the cost model. Date Descriptions 1 July 2019 Motor Vehicle Cash 30 June 2020 Depreciation Expense Debit $ Credit $ 120 000 120 000 25 000 Accumulated Depreciation - MV 25 000 30 June 2021 Depreciation Expense 25 000 Accumulated Depreciation -MV 25 000 30 June 2021 Impairment Loss 10 000 Accumulated Impairment - MV 10 000 = **CA 120 000 - 25 000 - 25 000 = 70 000 **RA = higher of (FV - Cost to sell) and value in use = 60 000 4