Exercise 11.23 ACQUISITIONS, REVALUATIONS, REPLACEMENTS, DEPRECIATION ** Hamburg Trading operates in a very competitive field. To maintain its market position, it purchased two new machines for cash on 1 January 2013. It had previously rented its machines. Machine A cost $40 000 and Machine B cost $ 100 000. Each machine was expected to have a useful life of 10 years, and residual values were estimated at $2000 for Machine A and $5000 for Machine B. On 30 June 2014, Hamburg 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 $32 000 and $90 000 respectively on that date. The useful life and residual value of Machine A were reassessed to 8 years and $1500. The useful life and residual value of Machine B were reassessed to 8 years and $4000. On 2 January 2015, extensive repairs were carried out on Machine B for $66 000 cash. Hamburg Trading expected these repairs to extend Machine B's useful life by 3.5 years, and it revised Machine B's estimated residual value to $9450. Owing to technological advances, Hamburg Trading decided to replace Machine A. It traded in Machine A on 31 March 2015 for new Machine C, which cost $64 000. A $28 000 trade-in was allowed for Machine A, and the balance of Machine C's cost was paid in cash. Transport and installation costs of $950 were incurred in respect to Machine C. Machine C was expected to have a useful life of 8 years and a residual value of $8000. Hamburg Trading uses the straight-line depreciation method, recording depreciation to the nearest month and the nearest dollarpound. The end of its reporting period is 30 June. On 30 June 2015, fair values were determined to be $140 000 and $65 000 for Machines B and C respectively. Required Prepare general journal entries to record the above transactions and the depreciation journal entries required at the end of each reporting period up to 30 June 2013. (Narrations are not required but show all workings.) Exercise 11.23 ACQUISITIONS, REVALUATIONS, REPLACEMENTS, DEPRECIATION Hamburg Trading operates in a very competitive field. To maintain its market position, it purchased two new machines for cash on 1 January 2013. It had previously rented its machines. Machine A cost $40 000 and Machine B cost $ 100 000. Each machine was expected to have a useful life of 10 years, and residual values were estimated at $2000 for Machine A and $5000 for Machine B. On 30 June 2014, Hamburg 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 $32000 and $90 000 respectively on that date. The useful life and residual value of Machine A were reassessed to 8 years and $1500. The useful life and residual value of Machine B were reassessed to 8 years and $4000. On 2 January 2015, extensive repairs were carried out on Machine B for $66 000 cash. Hamburg Trading expected these repairs to extend Machine B's useful life by 3.5 years, and it revised Machine B's estimated residual value to $9450. Owing to technological advances, Hamburg Trading decided to replace Machine A. It traded in Machine A on 31 March 2015 for new Machine C, which cost $64000. A $28000 trade-in was allowed for Machine A, and the balance of Machine C's cost was paid in cash. Transport and installation costs of $950 were incurred in respect to Machine C. Machine C was expected to have a useful life of 8 years and a residual value of $8000. Hamburg Trading uses the straight-line depreciation method, recording depreciation to the nearest month and the nearest dollarpound. The end of its reporting period is 30 June. On 30 June 2015, fair values were determined to be $140 000 and $65000 for Machines B and C respectively. Required Prepare general journal entries to record the above transactions and the depreciation journal entries required at the end of each reporting period up to 30 June 2013. (Narrations are not required but show all workings.) Exercise 11.23 ACQUISITIONS, REVALUATIONS, REPLACEMENTS, DEPRECIATION ** Hamburg Trading operates in a very competitive field. To maintain its market position, it purchased two new machines for cash on 1 January 2013. It had previously rented its machines. Machine A cost $40 000 and Machine B cost $ 100 000. Each machine was expected to have a useful life of 10 years, and residual values were estimated at $2000 for Machine A and $5000 for Machine B. On 30 June 2014, Hamburg 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 $32 000 and $90 000 respectively on that date. The useful life and residual value of Machine A were reassessed to 8 years and $1500. The useful life and residual value of Machine B were reassessed to 8 years and $4000. On 2 January 2015, extensive repairs were carried out on Machine B for $66 000 cash. Hamburg Trading expected these repairs to extend Machine B's useful life by 3.5 years, and it revised Machine B's estimated residual value to $9450. Owing to technological advances, Hamburg Trading decided to replace Machine A. It traded in Machine A on 31 March 2015 for new Machine C, which cost $64 000. A $28 000 trade-in was allowed for Machine A, and the balance of Machine C's cost was paid in cash. Transport and installation costs of $950 were incurred in respect to Machine C. Machine C was expected to have a useful life of 8 years and a residual value of $8000. Hamburg Trading uses the straight-line depreciation method, recording depreciation to the nearest month and the nearest dollarpound. The end of its reporting period is 30 June. On 30 June 2015, fair values were determined to be $140 000 and $65 000 for Machines B and C respectively. Required Prepare general journal entries to record the above transactions and the depreciation journal entries required at the end of each reporting period up to 30 June 2013. (Narrations are not required but show all workings.) Exercise 11.23 ACQUISITIONS, REVALUATIONS, REPLACEMENTS, DEPRECIATION Hamburg Trading operates in a very competitive field. To maintain its market position, it purchased two new machines for cash on 1 January 2013. It had previously rented its machines. Machine A cost $40 000 and Machine B cost $ 100 000. Each machine was expected to have a useful life of 10 years, and residual values were estimated at $2000 for Machine A and $5000 for Machine B. On 30 June 2014, Hamburg 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 $32000 and $90 000 respectively on that date. The useful life and residual value of Machine A were reassessed to 8 years and $1500. The useful life and residual value of Machine B were reassessed to 8 years and $4000. On 2 January 2015, extensive repairs were carried out on Machine B for $66 000 cash. Hamburg Trading expected these repairs to extend Machine B's useful life by 3.5 years, and it revised Machine B's estimated residual value to $9450. Owing to technological advances, Hamburg Trading decided to replace Machine A. It traded in Machine A on 31 March 2015 for new Machine C, which cost $64000. A $28000 trade-in was allowed for Machine A, and the balance of Machine C's cost was paid in cash. Transport and installation costs of $950 were incurred in respect to Machine C. Machine C was expected to have a useful life of 8 years and a residual value of $8000. Hamburg Trading uses the straight-line depreciation method, recording depreciation to the nearest month and the nearest dollarpound. The end of its reporting period is 30 June. On 30 June 2015, fair values were determined to be $140 000 and $65000 for Machines B and C respectively. Required Prepare general journal entries to record the above transactions and the depreciation journal entries required at the end of each reporting period up to 30 June 2013. (Narrations are not required but show all workings.)