An item of depreciable machinery is acquired on 1 July 2016 for $280 000. It is expected to have auseful life of 10 years and a zero-residual value (straight-line). On 1 July 2020, it is decided to revaluethe asset to its fair value of $150 000.Required:Provide journal entries to account for the revaluation
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
An item of
useful life of 10 years and a zero-residual value (straight-line). On 1 July 2020, it is decided to revalue
the asset to its fair value of $150 000.
Required:
Provide
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