On 30 June 2020 Timmy Ltd had the following balances for equipment before preparing end of year adjustments:

Equipment (at fair value)	$85 000
Accumulated depreciation – equipment	(10 000)

• The equipment is measured using the revaluation model. Timmy Ltd performs revaluations on the equipment every two (2) years. The tax rate is 30%.
• The equipment was last revalued on 30 June 2018, whereby a loss on revaluation of $3000 was recorded in profit for the year. As of 30 June 2018, the equipment had a remaining useful life of 8 years and a residual value of $5 000.

On 30 June 2020, Timmy Ltd obtained a fair value for the equipment at $73 000. Depreciation expense on the building for 30 June 2020 has not yet been recorded.

Required:

Prepare the journal entries necessary to revalue the equipment on 30 June 2020.

Answer rating: 100% (QA)

Solution Equipment value on 30 June 85000 Depreciation of equipment 10... View the full answer