Question: Ma Ltd is a GST registered company with an annual accounting period ending on 30 June 2018. It measures its investment property and all PP & E except equipment at fair value.

2. On 1 July 2017, the general ledger balance for Building, classified as PP & E, was $2,100,000, for Accumulated Depreciation, Building was $0, and for Revaluation Reserve, Building was $230,000. The building will be depreciated under the straight-line method for another 40 years, assuming no residual value, and counting forward from 1 July 2017. On 30 June 2018, after annual depreciation had been recorded and posted, an appraisal produced a fair value estimate for the building of $2,000,000. Ma Ltds general ledger also includes the following accounts: Gain/Loss Revaluation, Building and OCI Gain/Loss, Revaluation Building.

Required:

Prepare the journal entry to revalue the building on 30 June 2018.

3. After last years revaluation, Land had a balance of $1,500,000 and the Land Revaluation Reserve account had a $300,000 normal balance. On 30 June 2018, the land was appraised at $1,100,000. Ma Ltds general ledger also includes the following accounts: Gain/Loss Revaluation, Land and OCI Gain/Loss, Revaluation Land.

Required:

Prepare the journal entry to revalue the land on 30 June 2018.

4. Ignore GST. Equipment with a cost of $26,000 and accumulated depreciation to the date of the exchange of $19,000 was exchanged for new equipment with a list price of $35,000. A trade-in allowance of $9,000 was allowed on the old equipment, and the balance was paid in cash. Ma Ltds bookkeeper journalised the transaction as follows:

Equipment 33,000

Accumulated Depreciation 19,000

Equipment 26,000

Cash 26,000

Required:

Prepare the correcting (not the correct) journal entry, if one is required.

5. Ma Ltd incurred the following expenditures related to research and development that led to a software product: research--$12,000; development charges prior to producing a prototype--$8,000; development charges after achieving technical feasibility but prior to sale of the software--$7,000; marketing costs after the software was ready for sale--$2,000. If capitalised, software expenditures are considered an intangible asset. Ma Ltds bookkeeper debited R & D Expense for the entire $29,000. The credits were journalised correctly. The general ledger also includes accounts for Marketing Expenses and Software. Ignore GST.

Required:

Prepare the correcting (not the correct) journal entry, if one is required.

a)Do not need
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