Robin Limited(Robin)purchased a piece of equipment and it was fully operational as at 1 February 2019. The
Question:
Robin Limited(‘Robin’)purchased a piece of equipment and it was fully operational as at 1 February 2019. The equipment was purchased for $320,000. In addition to the purchase price, Robinspent $40,000 to transport the equipment on site and $60,000 of engineering fees to set-up the equipment. It had an estimated useful life of 10 years and an estimated residual value of $60,000. Each year $6,000 is spent on repairs and maintenance. On 1 July 2021, $80,000 was spent on a major upgrade after which the equipment had an expected useful life of 5 years from the date of the upgrade with a revised residual value of $38,000. On 1 March 2023, the equipment was sold for $120,000 cash. Robin’s financial year end balance date is 30 June and Robinuses straight-line depreciation.
Record the journal entry for the $80,000 upgrade to the equipment and the journal entry to record the depreciation on the equipment for the year ending 30 June 2022.
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen