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Prepare the journal entries to account for the events

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Please provide step by step calculation process and use straight method to calculate depreciation (fair value-residual value/useful life) as well as stating the revaluation surplus and loss.

  • On 1 July 2017, Cambridge Ltd paid $250,000 cash to acquire a machine. On this date it was estimated that the machine had a useful life of ten years and a residual value of $30,000. In accordance with AASB 116 Property, Plant and Equipment, Cambridge Ltd uses the revaluation model as its accounting policy to measure items of property, plant and equipment and the straight-line method of depreciation. Cambridge Ltd has a 30 June reporting date.

An independent valuer provided the following fair values for the machine:

Reporting date

30 June 2018        30 June 2019         30 June 2020

Fair value

$255,000               210,000                          173,500

On 31 December 2020, the machine was sold for $160,000 cash.

Required

Question 1: Prepare the journal entries to account for the events and transactions in relation to the machine between 1 July 2017 and 31 December 2020.

Reference no: EM132519773

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