Question 2. Marks: 15 Suggested time allocation: 27 Minutes Gemart Ltd acquired a printing machine on 1 July 2014 for $200,000. It is expected to have a useful life of 5 years, with the benefits being derived on a straight-line basis. The residual value is expected to be Snil. Additional information: On 1 July 2016 the machine is deemed to have a fair value of $150,000 and a revaluation is undertaken in accordance with Gemart Ltd's policy of measuring property, plant and equipment at fair value. On 1 July 2018 the asset is sold for $120,000. Genmart Ltd prepares a single income statement. Genmart Ltd has always adopted the revaluation model for the machinery class of assets. Ignore the taxation impact of transactions and events. Required: (a) Provide the journal entries necessary to account for the above transactions and events from 1 July 2014 to 30 June 2015. (2 marks) (b) Provide the journal entries necessary to account for the above transactions and events from 1 July 2015 to 30 June 2017. (6 marks) (c) Provide the journal entries necessary to account for the above transactions and events from 1 July 2017 to 30 June 2019. (6 marks) If Genmart was using the cost model, explain the effect on profits when the asset was sold on 1 July 2018. (1 marks) (d) Question 2. Marks: 15 Suggested time allocation: 27 Minutes Gemart Ltd acquired a printing machine on 1 July 2014 for $200,000. It is expected to have a useful life of 5 years, with the benefits being derived on a straight-line basis. The residual value is expected to be Snil. Additional information: On 1 July 2016 the machine is deemed to have a fair value of $150,000 and a revaluation is undertaken in accordance with Gemart Ltd's policy of measuring property, plant and equipment at fair value. On 1 July 2018 the asset is sold for $120,000. Genmart Ltd prepares a single income statement. Genmart Ltd has always adopted the revaluation model for the machinery class of assets. Ignore the taxation impact of transactions and events. Required: (a) Provide the journal entries necessary to account for the above transactions and events from 1 July 2014 to 30 June 2015. (2 marks) (b) Provide the journal entries necessary to account for the above transactions and events from 1 July 2015 to 30 June 2017. (6 marks) (c) Provide the journal entries necessary to account for the above transactions and events from 1 July 2017 to 30 June 2019. (6 marks) If Genmart was using the cost model, explain the effect on profits when the asset was sold on 1 July 2018. (1 marks) (d)
