On 31 December Yr 5, Matahari Sdn Bhd purchased a new machinery costing RM 100 000. Matahari Sdn Bhd estimates the machine to be utilize for 10 years, at the end of which it will have a residual value of RM 5 000. It depreciates it assets based on straight-line method.

On 1 July Yr 9, the company had decided to revalue the Machinery to RM 120 000 and its new residual value is to be estimated RM 15,000 but the estimated life is unchanged.

On 30 June Yr 11, Matahari decided to revalue the machinery to RM 60,000 with a new estimated life of 4 years but there is no change in the residual value.

The machinery was sold on 1 October Yr 12 for RM 30 000. The company prepares its accounts on 31 December annually. The asset revaluation reserves are transferred to retained earnings when the asset is disposed.

Required:

a) Compute the revaluation gain or loss for Yr9, Yr 11 and disposal for Yr12. (show clear workings) (17 marks)

b) Prepare the journal entries to record the revaluation and the adjusting entries as at 31 December for Yr 9, Yr 11 and Yr12. 

Answer rating: 100% (QA)

31 Dec year 5 machinery purchased RM 100000 Useful life 10 years Residual value 5000 De... View the full answer