The following information was shown in the book of ABC ltd as at 30 June 2021:

	Cost	Date of purchase	Fair value	Value in Use
Machinery	$100,000	1 July 2018	$70,000	$65,000
Vehicle	45,000	1 Jan 2019	35,000	34,000
Land	88,000	5 March 2020	85,000	90,000

ABC Ltd depreciates all of its items of Property, Plant & Equipment (PPE) using a straight-line method of depreciation at 10% per annum.

If ABC Ltd were to sell the PPE items, the cost associated with selling each of the item is $2,000.

ABC Ltd applies the cost model to all of the PPE items since acquisition. However, the management of ABC Ltd has been advised to change to the revaluation model to better provide relevant information. ABC Ltd changed to the revaluation model for vehicle and land but maintain the cost model to account for the machinery.

ABC Ltd accounting cycle ends on 30 June each year.

The applicable tax rate is 30%.

Required:

Provide journal entries to account for the items of Property, Plant & Equipment of ABC Ltd as at 30 June 2021 in accordance to IAS 16/ AASB 116 Property, Plant & Equipment and IAS 36/ AASB 136 Impairment of Assets. Show all workings. Narrations for the journal entries are required.

Answer rating: 100% (QA)

As per IAS 36 AASB 136 Impairment of Assets If the carrying amount of the assets is more than the recoverable amount then the asset is said to be impaired and the difference of the above amount is the ... View the full answer