At 30 June 2020, Harry Ltd has reported the following assets. Asset Carrying Amount ($) Useful Life Machine (Original cost = $300,000) 210,000 10 years Vehicle (Original cost = $280,000) 168,000 5 years Both assets are measured using the cost model and depreciated on a straight-line basis over their expected useful lives. On 31 December 2020, the company decided to change the basis of measuring the two assets from the cost model to the revaluation model. Machine was revalued to $250,000 with a new expected useful life of 10 years. Vehicle was revalued to $140,000 with a new expected useful life of 4 years. On 30 June 2021, Machine was revalued to $145,000. The tax rate is 30%. Required: Prepare the journal entries at 31 December 2020 and 30 June 2021 in relation to Machine and Vehicle. Template for journal entries: Date Particulars Debit Credit

At 30 June 2020, Harry Ltd has reported the following assets. Asset Carrying Amount ($) Useful Life Machine (Original cost = $300,000) 210,000 10 years Vehicle (Original cost = $280,000) 168,000 5 years Both assets are measured using the cost model and depreciated on a straight-line basis over their expected useful lives. On 31 December 2020, the company decided to change the basis of measuring the two assets from the cost model to the revaluation model. Machine was revalued to $250,000 with a new expected useful life of 10 years. Vehicle was revalued to $140,000 with a new expected useful life of 4 years. On 30 June 2021, Machine was revalued to $145,000. The tax rate is 30%. Required: Prepare the journal entries at 31 December 2020 and 30 June 2021 in relation to Machine and Vehicle. Template for journal entries: Date Particulars Debit Credit

Name: At 30 June 2020, Harry Ltd has reported the following assets.AssetCar
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Description: At 30 June 2020, Harry Ltd has reported the following assets.AssetCarrying Amount ($)Useful LifeMachine (Original cost = $300,000)210,00010 yearsVehicle (Original cost =$280,000)168,0005 yearsBoth assets are measured using the cost model and depreci

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

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.

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Question

At 30 June 2020, Harry Ltd has reported the following assets.
Asset
Carrying Amount ($)
Useful Life
Machine (Original cost = $300,000)
210,000
10 years
Vehicle (Original cost =
$280,000)
168,000
5 years
Both assets are measured using the cost model and depreciated on a straight-line basis over their
expected useful lives.
On 31 December 2020, the company decided to change the basis of measuring the two assets from the
cost model to the revaluation model. Machine was revalued to $250,000 with a new expected useful life
of 10 years. Vehicle was revalued to $140,000 with a new expected useful life of 4
years.
On 30 June 2021, Machine was revalued to $145,000.
The tax rate is 30%.
Required:
Prepare the journal entries at 31 December 2020 and 30 June 2021 in relation to Machine and Vehicle.
Template for journal entries:
Date
Particulars
Debit
Credit
FO

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