Reference no: EM132525264
Extracts from the statements of financial position of Wild Boar Ltd as at 30 June 2017 and 30 June 2016 are as follows:
2017 30 June 2016 30 June
Assets
Cash 150,000 180,000
Account receivables 96,000 85,000
Allowance for bad debts (7,000) (5,200)
Prepaid rent 50,000 56,000
Equipment 80,000 80,000
Accum. dep - equipment (32,000) (28,000)
Land 200,000 100,000
Machine 800 0
Accum. dep - Machine 50 0
Deferred tax asset ? 19,470
Liabilities
Trade payables 68,000 76,000
Unearned service revenue 60,000 50,000
Provision for annual leave 15,200 9,700
Deferred tax liability ? 18,900
Additional information:
(a) The accumulated depreciation on Equipment for tax purposes was $47,000 at 30 June 2017 (2016: $35,000). The annual depreciation expense of Equipment for accounting purposes was $4,000.
(b) The company acquired Machine at 1 July 2016 at the initial cost of $1,000 with an expected useful life of 10 years and the expected residual value of $0. The company uses the straight-line depreciation for Machine. The accumulated depreciation on Machine for tax purposes was $50 at 30 June 2017.
(c) The company uses the revaluation model for Land and Machine, while Equipment is measured based on the cost model. On 31 December 2016, Land was revalued to $200,000 and Machine was revalued to $800 with an expected useful life of 8 years.
(d) On 31 December 2017, the company revalued Land again. The fair value of Land on that date was $80,000.
(e) On 31 December 2017, the company had impairment tests for Equipment and Machine. The recoverable amount of Equipment was assessed as $43,000, while the recoverable amount of Machine was assessed as $615.
(d) The corporate tax rate is 30%.
Required:
Question 1: Provide the journal entries related to the revaluation of Land and Machine on 31 December 2016. Working are not required.
Question 2: What are the things that related to the revaluation ?