On 1 January 2018 Kettle Ltd acquired a vehicle at a cost of $30,000, with a useful life of 6 years, and no residual value. Kettle Ltd depreciates vehicles using a straight line method (end of year 30 June).

On 1 January 2021 Kettle Ltd incurred $5,000 in costs to replace parts on the vehicle, extending its useful life by 2 years, and giving it a residual value of $2,000

On 2 January 2021, the depreciable amount of the vehicle is:

Select one:

a.

$18,000

b.

$33,000

c.

$36,000

d.

$20,000

The records of Jan Ltd show that on 30 June 2019 (end of reporting period) equipment had the following balances: equipment (cost) $80,000 and accumulated depreciation $48,750. The equipment was purchased on 1 January 2017 at a cost of $80,000 with an estimated useful life of 4 years and residual value of $2,000.

On 1 January 2020, Jan Ltd decided to overhaul the equipment, replacing some parts of the equipment. The overhaul cost $20,000. The overhaul of equipment would increase the useful life of the equipment by 4 years and increase its residual value by $1,500.

The journal entries required at (i) 1 January 2020 to close (write off) accumulated depreciation on equipment, and (ii) 30 June 2020 to record depreciation expense on equipment are as follows:

Select one:

a.

(i) DR Accumulated depreciation 48,750 CR Equipment 48,750 (ii) DR Depreciation expense 9,550 CR Accumulated depreciation 9,550

b.

(i) DR Accumulated depreciation 58,500 CR Equipment 58,500 (ii) DR Depreciation expense 7,600 CR Accumulated depreciation 7,600

c.

(i) DR Depreciation expense 58,500 CR Accumulated depreciation 58,500 (ii) DR Depreciation expense 7,600 CR Accumulated depreciation 7,600

d.

(i) DR Accumulated depreciation 58,500 CR Equipment 58,500 (ii) DR Depreciation expense 3,800 CR Accumulated depreciation 3,800

When an asset has a loss on revaluation in the current year for an amount that is less than the amount of a gain on revaluation for that asset in a previous year, the loss on revaluation should be recorded:

Select one:

a.

as an increase, net of tax, in an asset revaluation surplus account.

b.

in profit or loss (P/L) for the year as an expense.

c.

in other comprehensive income (OCI).

d.

partly in other comprehensive income (OCI), and the remainder in the profit or loss (P/L) for the year as an expense.

Lilly Ltd acquired equipment on 1 July 2019 at a cost of $450,000. The useful life and residual value were estimated to be 4 years and $50,000 respectively. On 30 June 2021, Lilly Ltd decides to adopt the revaluation model for equipment and assesses the fair value of the equipment to be $210,000. Lilly Ltd uses the straight-line method to depreciate equipment.

Assuming depreciation expense on equipment for the year ended 30 June 2021 has been recorded, the journal entries on 30 June 2021 to (i) write off (close) accumulated depreciation on equipment, and, (ii) record a revaluation gain or loss on equipment are:

Select one:

a.

(i) DR Accumulated depreciation 200,000 CR Equipment 200,000 (ii) DR Loss on revaluation (P/L) 40,000 CR Equipment 40,000

b.

(i) DR Accumulated depreciation 200,000 CR Equipment 200,000 (ii) DR Equipment 40,000 CR Gain on revaluation (OCI) 40,000

c.

(i) DR Accumulated depreciation 300,000 CR Equipment 300,000 (ii) DR Loss on revaluation (P/L) 60,000 CR Equipment 60,000

d.

(i) DR Accumulated depreciation 200,000 CR Depreciation expense 200,000 (ii) DR Equipment 40,000 CR Loss on revaluation (P/L) 40,000

On 30 June 2019, Grove Ltd adopted the revaluation model to measure equipment. Due to the revaluation carried out on 30 June 2019, Grove Ltd recognised a gain on revaluation of $30,000 for the one item of equipment listed in this class.

After recording depreciation expense on equipment for the year ended 30 June 2020, and writing the equipment down to its carrying amount of $325,000, Grove Ltd obtained the fair value of $285,000 as at 30 June 2020 for the equipment.

The next journal entry required to record the revaluation for equipment on 30 June 2020 is:

Select one:

a.

DR Loss on revaluation (OCI) 30,000 DR Loss on revaluation (P/L) 10,000 CR Equipment 40,000

b.

DR Loss on revaluation (P/L) 40,000 CR Equipment 40,000

c.

DR Equipment 40,000 CR Gain on revaluation (OCI) 30,000 CR Loss on revaluation (P/L) 10,000

d.

DR Gain on revaluation (OCI) 30,000 CR Equipment 30,000