On 30 June 2019, Hong Kong Ltd reported the following information for equipment in its statement of financial position.

equipment                                                 1400000

less accumulated depreciation                   520000

                                                                    880000

Investigation of the property and plant records showed that the equipment consisted of two items: a machine (no. 1) that cost the company $800 000 and had a carrying amount of $420 000 at 30 June 2019, and another machine (no. 2) that originally cost $600 000 and had a carrying amount at 30 June 2019 of $460 000. Both machines are depreciated on a straight-line basis over 10 years.

On 30 September 2019, there was an overhaul on machine (no. 1) replacing main operating parts to the amount of $88 000 (GST Inclusive), after which the machine (no. 1) is expected to have a useful life extended by 2 additional years. Repairs and maintenance on machine (no. 2) amounted to $22 000 (GST Inclusive) during the same period.

On 1 January 2020, the directors of Wong Ltd decided to switch the valuation method from the cost model to the revaluation model. Machine no. 1 was revalued to its fair value of $500 000, with an expected future useful life of 6 years, and Machine no. 2 was revalued to $400 000, with an expected remaining useful life of 6 years.

On 31 December 2020, machine (no. 2) was sold for $340 000 cash plus GST.

a) Calculate the number of years & months both machines (no. 1 & 2.) have been utilised by Hong Kong Ltd.

b) Prepare general journal entries in relation to the following:
i. Overhaul of machine (no. 1).
ii. Repairs and maintenance of machine (no. 2).

c) Prepare general journal entries in relation to the following:
i. Revaluation on 1 January, 2020.

ii. Closing entries on 30 June, 2020.

 

d) Prepare general journal entries in relation to the following:
i. Sale of machine (no. 2) on 31 December, 2020.