60.1K

Verified Solution

Link Copied!

Additional Problem 12 Part A On 1 July 2016, Dunlop Ltd purchased new equipment on credit from Serry Ltd (terms 2.30.60). The equipment was advertised for sale at $40 000 but after careful negotiation was invoiced at a reduced price of $36 000 The cost of installation of the equipment, paid in cash on 1 July 2016, was $4 000 and the equipment was expected to be sold for $10 000 at the end of its 4 years life in the business. Serry Ltd was paid in full settlement on 25 July 2016. It was decided to adopt the cost model of asset valuation and to use the straight-line method of depreciation On 30 June 2017 the value in use of the asset was estimated to be $20 000. the assets fair value $15 000 and its replacement cost $40 000. On 31 December 2017 the equipment was sold for $18 000 cash. Required: (a) Show the general journal entries for the 1 July 2016 transactions (b) Show the general journal entry for the 25 July 2016 transaction (c) Show the general journal entry for depreciation on 30 June 20 (d) Show the general journal entry (if applicable) for the impairment of the equipment on 30 June 2017 Show the general journal entry for the depreciation of the equipment for the 6 months ending 31 December 2017 Show the general journal entry to record the disposal (and gain or loss on sale) of the equipment on 31 December 2017 (e) (t) Part B Kayman Ltd purchased an item of plant on 1 July 2013 and chose the fair value method to account for the asset. The plant cost $100,000 and was to be depreciated using the straight-ine method over 20 years when it will be scraped. On the 30 June 2015, the plant's fair value was $180,000. On 30 June 2016, no revaluation of plant was required, whilst on 30 June 2017 its fair value was determined to be $50.000. Required: (a) Prepare the journal entries that would occur on 30 June 2015 (including depreciation) in accordance AASB 116- Property, Plant and Equipment. b) Prepare the journal entry that would occur on 30 June 2016 in (c) Prepare the journal entries that would occur on 30 June 2017 (including accordance AAS8 116-Property, Plant and Equipment. depreciation) in accordance AASB 116-Property. Plant and Equipment

Answer & Explanation Solved by verified expert

See Answer