The Accountant of Tracer Limited is actually finalising the preparation of the financial statements for the year ended 31 December 2019. He has solicited your advice on the correct treatment of the following:

(a) Tracer Limited acquired a new spraying equipment at a cost of $200,000 in September 2019. The equipment was tested by staff in September 2019 to ensure that it would function correctly after implementation. As a result of the testing, various adjustments were made to the equipment, without which the equipment would not function correctly. The cost associated with this period was approximately $25,000. During the last three months of 2019 the equipment was available for use but, due to a lack of marketing, it was only used intermittently. The monthly cost of running the equipment during that three-month period was $15,000. Tracer Limited is keen to capitalize the costs associated with this equipment, although the bookkeeper has expensed the costs to date as follows: Dr Plant and Equipment expenses $70,000 Cr Bank $70,000

(b) On 1 July 2019, Tracer Limited replaced a lift in one of its factory buildings. The cost of the new lift was $250,000, and the carrying amount of the old lift was $56,000. The old lift had a zero disposal value, and the present value of the cost of decommissioning the new lift was estimated to be $20,000.

(c) Tracer Limited`s head office is included in Property, plant and equipment. In the past, Tracer has revalued the building each year and transferred any movement to the revaluation reserve. Relevant details of the cost and fair value of the property are as follows:

Cost $20

Valuation 31 December 2018 $31

Valuation 31 December 2019 $29

The valuation at 31 December 2019 have not yet been incorporated into the financial statements.

REQUIRED

In line with the requirements of IAS 16 Property, plant & equipment - outline your advice on the correct accounting treatment on each of the issues mentioned above and the corresponding journal entries required.