Question 1

At 1 January 2020, Andrew Ltd has recorded plant at a carrying amount of $600,000. The original cost of the plant was $800,000. Plant is depreciated on a straight line basis over a 10-year period, and is measured using the cost model.

On 30 June 2020, the directors of Andrew Ltd decided to change the basis of measuring the plant from the cost model to the revaluation model. Plant was revalued to $588,000 with an expected useful life of 6 years.

On 30 June 2021, the fair value of plant was determined to be $470,000 with an expected useful life of 6 years. The tax rate is 30%.

Required

Prepare the journal entries at 30 June 2020 and 30 June 2021 in relation to plant.

10 marks