Reference no: EM132672437

On 30 June 2021, the statement of financial position of Cook Ltd showed the following non-current assets after charging depreciation:

Building                         $300,000

Accumulated depreciation  ($100,000)                    $200,000

Motor vehicle                         $120,000

Accumulated depreciation     ($40,000)                  $80,000

The company has adopted fair value for the valuation of non-current assets. This has resulted in the recognition in previous periods of an asset revaluation surplus for the building of $20,000. On 30 June 2021, an independent valuer assessed the fair value of the building to be $160,000 and the vehicle to be $90,000.

Required:

Problem a) necessary entries to revalue the building and the vehicle as at 30 June 2021.

Problem b) Assume that the building and vehicle had remaining useful lives of 25 years and 4 years respectively, with zero residual value. Prepare entries to record depreciation expense for the year ended 30 June 2022 using the straight-line method.