1. Comprehensive exercise 6.40

Gardiner Ltd acquired two items of equipment on 1 July 20X5. Asset A had a cost of $300 000, while Asset B

had a cost of $240 000. At the date of acquisition, Gardiners directors determine to depreciate both items

of equipment on a straight-line basis over a period of six years. The company elects to adopt the revaluation

model for both assets subsequent to acquisition.

At 30 June 20X6, Gardiners directors estimate the fair value of Assets A and B at $265 000 and $190 000

respectively, with no change in the originally determined useful lives for both assets.

At 30 June 20X7, Gardiners directors estimate the fair value of Assets A and B at $190 000 and $165 000

respectively, again with no change in the originally determined useful lives for both assets.

Assume a tax rate of 30%.

Required

1 Prepare any necessary journal entries for Assets A and B at 30 June 20X6.

2 Prepare any necessary journal entries for Assets A and B at 30 June 20X7.