Question
On 1 January 2016, Leibhardt Ltd acquired two identical pieces of equipment for a cost of $410,000 each plus GST. It was estimated that each
On 1 January 2016, Leibhardt Ltd acquired two identical pieces of equipment for a cost of $410,000 each plus GST. It was estimated that each item would have a useful life of 8 years and a residual value of $30,000 each. The company uses the straight-line method of depreciation and its end of reporting period is 30 June. On 1 July 2022, the company changed its accounting policy and revalued each item of equipment upwards by $46,000, based on an independent valuer's report, to fair value. There was no need to revise useful lives or residual amounts. On 31 December 2023, one of the items of equipment was sold for $91,000 cash plus GST. Prepare entries (in general journal format) in relation to the equipment from acquisition date to 31 December 2023.
Leibhardt Ltd General journal Date Particulars Debit Credit 2016 Jan. 1 (Acquisition of equipment) June 30 (Depreciation for 6 months) 201722 June 30 (Annual depreciation amount for one year this journal entry would be duplicated each year) 2022 Jul. 1 (Revaluation of equipment) 2023 June 30 (Annual depreciation amount for one year) Dec. 31 (Depreciation on one piece for 6 months) (Sale of equipment for cash) (Write off equipment sold)Step by Step Solution
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