7. An entity purchases a machine on the 1 July 20x1 for $40,000. It is expected that the machine has a useful life of 8 years and straight line depreciation is used to depreciate the machine. On the 30 June 20x3, the machine is re-valued to its fair value of $45,000. Which of the following journal entries records the revaluation of the machine correctly?

A) Dr Machinery/Equipment 32,000

Cr Acc. Dep. Machinery/Equipment 12,000

Cr Revaluation Surplus 20,000 To record revaluation of the machine

B) Dr Acc. Dep. Machinery/Equipment 15,000

Cr Machinery/Equipment 15,000

To record transfer of accumulated depreciation to asset account

Dr Machinery/Equipment 20,000

Cr Revaluation Surplus 20,000

To record revaluation of the machine

C) Dr Machinery/Equipment 5,000

Cr Revaluation Surplus 5,000

To record revaluation of the machine

D) Dr Acc. Dep. Machinery/Equipment 10,000

Cr Machinery/Equipment 10,000

To record transfer of accumulated depreciation to asset account

Dr Machinery/Equipment 15,000

Cr Revaluation Surplus 15,000

To record revaluation of the machine

E) Dr Machinery/Equipment 5,000

Dr Acc. Dep. Machinery/Equipment 15,000

Cr Revaluation Surplus 20,000

To record revaluation of the machine

F) None of the above