On the 1 April 2019, Maria Turbines Ltd purchased some property for $4 200 000; recognised...

  

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On the 1 April 2019, Maria Turbines Ltd purchased some property for $4 200 000; recognised at $3 000 000 for land and $1 200 000 for a building. The straight line depreciation method was chosen for the buildings, with an economically useful life of nine years and a residual value of $300 000. On 31 March 2020, Maria Turbines Ltd switched to the revaluation model for property, plant and equipment. Revaluations were performed which resulted in a downward revaluation of $400 000 for the land and an upwards revaluation of $900 000 for the building being recorded in the Income Statement for the period ended 31 March 2020. At the date of this revaluation there was no change to the original estimation of the economic life of the buildings, however, the residual value was re-estimated as $400 000. On the 30 September 2021 the fair values were reassessed by an independent valuer to be $3 500 000 for the land and $1 300 000 for the building and the building's economically useful life was reassessed to 30 September 2025 and the residual value was re-estimated as $100 000. Required: Part A In relation to the Land only: (a) Prepare all the journal entries at 31 March 2020 to record the first revaluation. Show your workings in the journal entries. (b) Prepare all the journal entries at 30 September 2021 to record the second revaluation. Show your workings in the journal entries. (c) In relation to the land only prepare extracts from Maria Turbines Ltd's financial statements for the years ended 31 March 2020 and 2022. In addition to this, prepare financial statements assuming Maria Turbines Ltd had kept using the cost model. For the recoverable amount use the fair values provided above; the costs of disposal were negligible. (d) Explain why the land, at 31/3/2020, was recognised at the same carrying amount under both models. Part B In relation to the Building only: (a) Prepare all the journal entries at 31 March 2020 to record the first revaluation. Show your workings in the journal entries. (b) Prepare all the journal entries at 30 September 2021 to record the second revaluation. Show your workings in the journal entries. (c) In relation to the Building only prepare extracts from Maria Turbines Ltd's financial statements for the years ended 31 March 2020 and 2022. In addition to this, prepare financial statements assuming Maria Turbines Ltd had kept using the cost model. For the recoverable amount use the fair values provided above; the costs of disposal were negligible. On the 1 April 2019, Maria Turbines Ltd purchased some property for $4 200 000; recognised at $3 000 000 for land and $1 200 000 for a building. The straight line depreciation method was chosen for the buildings, with an economically useful life of nine years and a residual value of $300 000. On 31 March 2020, Maria Turbines Ltd switched to the revaluation model for property, plant and equipment. Revaluations were performed which resulted in a downward revaluation of $400 000 for the land and an upwards revaluation of $900 000 for the building being recorded in the Income Statement for the period ended 31 March 2020. At the date of this revaluation there was no change to the original estimation of the economic life of the buildings, however, the residual value was re-estimated as $400 000. On the 30 September 2021 the fair values were reassessed by an independent valuer to be $3 500 000 for the land and $1 300 000 for the building and the building's economically useful life was reassessed to 30 September 2025 and the residual value was re-estimated as $100 000. Required: Part A In relation to the Land only: (a) Prepare all the journal entries at 31 March 2020 to record the first revaluation. Show your workings in the journal entries. (b) Prepare all the journal entries at 30 September 2021 to record the second revaluation. Show your workings in the journal entries. (c) In relation to the land only prepare extracts from Maria Turbines Ltd's financial statements for the years ended 31 March 2020 and 2022. In addition to this, prepare financial statements assuming Maria Turbines Ltd had kept using the cost model. For the recoverable amount use the fair values provided above; the costs of disposal were negligible. (d) Explain why the land, at 31/3/2020, was recognised at the same carrying amount under both models. Part B In relation to the Building only: (a) Prepare all the journal entries at 31 March 2020 to record the first revaluation. Show your workings in the journal entries. (b) Prepare all the journal entries at 30 September 2021 to record the second revaluation. Show your workings in the journal entries. (c) In relation to the Building only prepare extracts from Maria Turbines Ltd's financial statements for the years ended 31 March 2020 and 2022. In addition to this, prepare financial statements assuming Maria Turbines Ltd had kept using the cost model. For the recoverable amount use the fair values provided above; the costs of disposal were negligible.

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