Question
X Ltd purchased equipment on 1 July 2011 for $ 39,800. Transport and installation costs of $ 4,200 were paid on 5 July 2011. Useful
X Ltd purchased equipment on 1 July 2011 for $ 39,800. Transport and installation costs of $ 4,200 were paid on 5 July 2011. Useful life and residual value were estimated to be 10 years and $ 1,800 respectively. X Ltd depreciates equipment using the straight-line method to the nearest month, and reports annually on 30 June. The company tax rate is 30%.
In June 2013, changes in technology caused the company to revise the estimated total life from 10 years to 5 years, and the residual value from $ 1,800 to $ 1,200. This revised estimate was made before recording the depreciation for the financial year ended 30 June 2013.
On 30 June 2013, the company adopted the revaluation model to account for equipment. An expert valuation was obtained showing that the equipment had a fair value of $ 30,000 at that date.
On 30 June 2014, depreciation for the year was charged and the equipment's carrying amount was remeasured to its fair value of $ 16,000.
On 30 September 2014, the equipment was sold for $ 8,400 cash.
Required: Prepare general journal entries to record the transactions and events for the period 1 July 2011 to 30 September 2014.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started