Red and White Inc. applies revaluation to machinery that has a carrying amount of $40,000 on December 31, 2019.

Revaluation surplus in relation to the machinery at the year-end: $1,500.

At the end of 2019, independent appraisers determine that the asset has a fair value of $35,000. In the accounting policy of the Company regarding the realization of the revaluation surplus: The Company transfers the revaluation surplus directly to the retained earnings when the asset is derecognized.

Required: Show the double journal entries regarding the revaluation.