You are a senior accountant in a second-tier accounting firm. Your manager has asked you to assist your client, Emerald Ltd regarding the accounting for their non-current assets. Emerald Ltd has provided you with the following extract from the adjusted trial balance for the period ended 30 June 2035 in relation to its non-current assets:

	Dr	Cr
Machinery	875,000
Accumulated depreciation- machinery		275,000
Building	2250,000
Accumulated depreciation- building		750,000

The directors of Emerald Ltd changed the valuation method for machinery from the cost basis to the fair value basis on 30 June 2035 (machinery depreciation expense was recorded for the year ended 30 June 2035 prior to revaluation).

Emerald Ltd has always measured its building using the fair value basis. The revaluation surplus account has a balance of $70,000 from previous revaluations. On 30 June 2035, an independent valuer assessed the fair value of the building to be $1,350,000 and the machinery to be $700,000.

The income tax rate is 30%.

Required:

a) Provide the journal entries required to revalue the machinery for the financial year ended 30 June 2035.

b) Provide the journal entries required to revalue the building for the financial year ended 30 June 2035.

c) Assume that the building and machinery had to remain useful lives of 40 years and 10 years respectively, with zero residual value. Prepare entries to record depreciation expenses for the year ended 30 June 2036 using the straight-line method.

Note: It's a dollar, there's no need to convert it to rupees, all that is needed was Journal entries.

Answer rating: 100% (QA)

Answer Solution 1 iParticulars Debit Credit Machinery Ac Dr 700000 ... View the full answer