Reference no: EM131997571
Question - Tugan's Turf Farm owned the following items of property, plant and equipment as at 30 June 2012:
Instructions - Round your answers to the nearest whole number.
Land (at cost) $180,000
Office building (at cost) 225,000
Accumulated depreciation (35,063 ) 189,937
Turf cutter (at cost) 98,000
Accumulated depreciation (63,551 ) 34,449
Water desalinator (at fair value) 283,000
Additional information (at 30 June 2012)
(a) The straight-line method of depreciation is used for all depreciable items of property, plant and equipment. Depreciation is charged to the nearest month and all figures are rounded to the nearest dollar.
(b) The office building was constructed on 1 April 2008. Its estimated useful life is 20 years and it has an estimated residual value of $60,000.
(c) The turf cutter was purchased on 21 January 2009, at which date it had an estimated useful life of 5 years and an estimated residual value of $4,800.
(d) The water desalinator was purchased and installed on 2 July 2011 at a cost of $200 000. On 30 June 2012, the plant was revalued upwards by $10,500 to its fair value on that day. Additionally, its useful life and residual value were re-estimated to 9 years and $27,000 respectively.
The following transactions occurred during the year ended 30 June 2013:
(Note: All payments are made in cash.)
(e) On 10 August 2012, new irrigation equipment was purchased from Pond Supplies for $55,500. On 16 August 2012, the business paid $750 to have the equipment delivered to the turf farm. Bob Digger was contracted to install and test the new system. In the course of installation, pipes worth $1,200 were damaged and subsequently replaced on 3 September. The irrigation system was fully operational by 19 September and Bob Digger was paid $14,400 for his services. The system has an estimated useful life of 4 years and a residual value of $0.
(f) On 1 December 2012, the turf cutter was traded in on a new model worth $120,000. A trade-in allowance of $28,500 was received and the balance paid in cash. The new machine's useful life and residual value were estimated at 6 years and $7,500 respectively.
(g) On 1 January 2013, the turf farm's owner Terry Clifford decided to extend the office building by adding three new offices and a meeting room. The extension work started on 2 February and was completed by 28 March at a cost of $73,500. The extension is expected to increase the useful life of the building by 4 years and increase its residual value by $7,500.
(h) On 30 June 2013, depreciation expense for the year was recorded. The fair value of the water desalination plant was $247,500.
Required - Prepare general journal entries to record the transactions and events for the reporting period ended 30 June 2013 (narrations are not required).