Scenario 2 Property, Plant and Equipment

a) The extracted financial statements of ChiHerbal shows the following land and buildings at 30 June 2018:

	$
Residential land, at cost	1 600 000
Factory land, at valuation 2015	1 440 000
Buildings, at valuation 2014	1 280 000
Accumulated depreciation	(160 000)

At 30 June 2018, the balance of Revaluation Surplus is $640 000, of which $480 000 relates to Factory land and $160 000 relates to Buildings. On 30 June 2018, independent valuations of the land and building are obtained. The assessed fair values of the above assets as at 30 June 2018 are:

	$
Residential land, previously recorded at cost	1 760 000
Factory land, previously revalued in 2015	1 120 000
Buildings, previously revalued in 2014	1 440 000

ChiHerbal Ltd classifies Residential land and Factory land as different classes of assets.

Required:

Prepare general journal entries to account for the revaluation of the above assets on 30 June 2018.

Note: Show all your workings. Journal narrations are required.

b) ChiHerbal acquired a delivery truck on 1 July 2015 for $480 000. The truck is expected to have a useful life of seven years, and is depreciated using the straightline method.

On 1 July 2017 the truck was revalued to $400 000. On this same date, its useful life is reassessed, according to which the truck is expected to have a remaining useful life of six years.

On 1 July 2018, the truck is unexpectedly sold for $220 000.

Required:

Prepare general journal entries to account for the revaluation of the truck on 1 July 2017 and the subsequent sale on 1 July 2018. Note: Show all your workings. Journal narrations are required.