Alex Trading operates in a very competitive field. To maintain its market position, it purchased two new machines for cash on 1 January 2021. Machine A cost $40 000 and Machine B cost $100 000. Each machine was expected to have a useful life of 8 years, and residual values were estimated at $3000 for Machine A and $6000 for Machine B.

On 30 June 2022, Alex Trading adopted the revaluation model to account for the class of machinery. The fair values of Machine A and Machine B were determined to be $42 000 and $86 000 respectively on that date. The useful life and residual value of Machine A were reassessed to 6 years and $4500. The useful life and residual value of Machine B were reassessed to 7 years and $4000.

On 2 January 2023, extensive repairs were carried out on Machine B for $50 000 cash. Robin Trading expected these repairs to extend Machine Bs useful life by 3.5 years, and it revised Machine Bs estimated residual value to $ 9 500.

Owing to technological advances, Alex Trading decided to replace Machine A. It traded in Machine A on 31 March 2023 for new Machine C, which cost $75 000. A $35 000 trade-in was allowed for Machine A, and the balance of Machine Cs cost was paid in cash. Transport and installation costs of $1 500 were incurred with respect to Machine C. Machine C was expected to have a useful life of 8 years and a residual value of $7 000.

Alex Trading uses the straight-line depreciation method, recording depreciation to the nearest month and the nearest dollar. The end of its reporting period is 30 June.

On 30 June 2023, fair values were determined to be $140 000 and $65 000 for Machines B and C respectively.