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On 1 July 2021, Herd Ltd. acquired a machine for $50,000 and decided to depreciate...

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Accounting

On 1 July 2021, Herd Ltd. acquired a machine for $50,000 and decided to depreciate it for 16 years with no residual amount. The tax rate is 20%. Assume that the fair values of this asset were: Date Fair Value 1/7/2021 $55,000 , 31/8/2021 $44,000 and 30/6/2022 $72,000.

a. Using the cost model, prepare the relevant journal entries from the date of acquisition to 30 June 2022, including tax effects. (1 mark)

b. Using the revaluation model, prepare the relevant journal entries from the date of acquisition to 30 June 2022, including tax effects. (2 marks)

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