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Required Prepare general journal entries to record the transactions and events for the reporting period ended 30 June 2024 in relation to the following assets:
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- Prepare general journal entries to record the transactions and events for the reporting period ended 30 June 2024 in relation to the following assets:
- Office building
- Turf cutters
- Water desalinator
- Irrigation equipment
- What choices of measurement model exist subsequent to assets being initially recognised?
- Why should an entity consider changing to an alternative measurement model?
Question 2 Swift Ltd owned the following items of property, plant and equipment as at 30 June 2023. Additional information (at 30 June 2023) - The straight-line method of depreciation is used for all depreciable items of PPE. Depreciation is charged to the nearest month and all figures are rounded to the nearest dollar. - The office building was constructed on 1 April 2019. Its estimated useful life is 20 rears and it has an estimated residual value of $40000. - The turf cutter was purchased on 21 January 2020 , at which date it had an estimated useful life of 5 years and an estimated residual value of $3200. - The water desalinator was purchased and installed on 2 July 2022 at a cost of $200000. On 30 June 2023, the plant was revalued upwards by $7000 to its fair value on that day. Additionally, its useful life and residual value were re-estimated to 9 years and $18000 respectively. The following transactions occurred during the year ended 30 June 2024. (Note: All payments are made in cash.) (i) On 10 August 2023 new irrigation equipment was purchased from Pond Supplies for $37000. On 16 August 2023 , the business paid $500 to have the equipment delivered to the turf farm. William Wagtail was contracted to install and test the new system. In the. gpurse_of installation, pipes worth $800 were damaged and subsequently replaced on 3 September. The irrigation system was fully operational by 19 September and William Wagtail was paid $9600 for his services. The system has an estimated useful life of 4 years and a residual value of $0. (ii) On 1 December 2023 , the turf cutter was traded in on a new model worth $80000. A tradein allowance of $19000 was received and the balance paid in cash. The new machine's useful life and residual value were estimated at 6 years and $5000 respectively. (iii) On 1 January 2024, the turf farm's owner decided to extend the office building by adding three new offices and a meeting room. The extension work started on 2 February and was completed by 28March at a cost of $49000. The extension is expected to increase the useful life of the building by 4 years and increase its residual value by $5000. (iv) On 30 June 2024 , depreciation expense for the year was recorded. The fair value of the water desalination plant was $165000. NOTE: Accounting for non-current assets and depreciation is covered in the textbook in chapter 8. Depreciation is also discussed in chapter 3 (p. 144-145, 7t Ed.)
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