REVALUATIONS & DISPOSAL OF NON-CURRENT ASSET

At 30 June 2020 Brothers Limited reported the following information for the respective non-current assets: Machinery at cost $400 000 with Accumulated depreciation amount of $100 000; Buildings at cost $900 000 with Accumulated depreciation amount of $350 000.

At 1 July 2020, the directors of Brothers Ltd decide to adopt the revaluation model and revalue the non-current asset classes to the following fair values: Machinery at $250 000 and Buildings at $850 000.

Required:

(i) Prepare general journal entries to record the revaluations, including any closing entries at the end of the reporting period.

(ii.) Assume that on 31 December, 2020 the company sold machinery for $280 000 cash. The machinery had a useful life of 10 years and residual value of $50 000. Use straight-line method of depreciation. Provide the necessary general journal entry to record the sale and derecognition of machinery.

Assume GST of 10%.