On 1 July 2019 Fruity & Fresh Ltd, a grocery store in Tasmania, purchased an item of
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Question:
On 1 July 2019 Fruity & Fresh Ltd, a grocery store in Tasmania, purchased an item of equipment at a cost of $750,000. The asset is to be depreciated using the straight-line method on the basis of an estimated useful life of 10 years and a negligible residual value. On 30 June 2022 it is determined that the same item of equipment was assessed as having a recoverable amount of $455,000 and a remaining useful life of 7 years. On 30 June 2025 the equipment was assessed as having a recoverable amount of $315,000 and a remaining useful life of 3 years.
Required
- Prepare general journal entries for the equipment of Fruity & Fresh Ltd for the years ended 30 June 2022, 30 June 2025 and 30 June 2026. Round to the nearest dollar and show all calculations. Closing entries are not required.
- Describe in your own words how to account for the reversal of an impairment loss. Provide an example and journal entries to support your description.
As a guide, write no more than half a page.
Related Book For
Operations Management Managing Global Supply Chains
ISBN: 978-1506302935
1st edition
Authors: Ray R. Venkataraman, Jeffrey K. Pinto
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