Swift Ltd owned the following items of property, plant and equipment as at 30 June 2023. Additional information (at 30 June 2023) The straight-line method of depreciation is used for all depreciable items of PPE. Depreciation is charged to the nearest month and all figures are rounded to the nearest dollar. The office building was constructed on 1 April 2019. Its estimated useful life is 20 years and it has an estimated residual value of $40 000. The turf cutter was purchased on 21 January 2020, at which date it had an estimated useful life of 5 years and an estimated residual value of $3200. The water desalinator was purchased and installed on 2 July 2022 at a cost of $200 000. On 30 June 2023, the plant was revalued upwards by $7000 to its fair value on that day. Additionally, its useful life and residual value were re-estimated to 9 years and $18 000 respectively. The following transactions occurred during the year ended 30 June 2024. (Note: All payments are made in cash.) (i) On 10 August 2023 new irrigation equipment was purchased from Pond Supplies for $37000. On 16 August 2023, the business paid $500 to have the equipment delivered to the turf farm. William Wagtail was contracted to install and test the new system. In the course of installation, pipes worth $800 were damaged and subsequently replaced on 3 September. The irrigation system was fully operational by 19 September and William Wagtail was paid $9600 for his services. The system has an estimated useful life of 4 years and a residual value of $0. (ii) On 1 December 2023, the turf cutter was traded in on a new model worth $80 000. A trade-in allowance of $19 000 was received and the balance paid in cash. The new machine’s useful life and residual value were estimated at 6 years and $5000 respectively. (iii) On 1 January 2024, the turf farm’s owner 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 $49 000. The extension is expected to increase the useful life of the building by 4 years and increase its residual value by $5000. (iv) On 30 June 2024, depreciation expense for the year was recorded. The fair value of the water desalination plant was $165 000. Required Prepare general journal entries to record the transactions and events for the reporting period ended 30 June 2024 in relation to the following assets: Office building Turf cutters Water desalinator Irrigation equipment What choices of measurement model exist subsequent to assets being initially recognised? Why should an entity consider changing to an alternative measurement model?

Swift Ltd owned the following items of property, plant and equipment as at 30 June 2023. Additional information (at 30 June 2023) The straight-line method of depreciation is used for all depreciable items of PPE. Depreciation is charged to the nearest month and all figures are rounded to the nearest dollar. The office building was constructed on 1 April 2019. Its estimated useful life is 20 years and it has an estimated residual value of $40 000. The turf cutter was purchased on 21 January 2020, at which date it had an estimated useful life of 5 years and an estimated residual value of $3200. The water desalinator was purchased and installed on 2 July 2022 at a cost of $200 000. On 30 June 2023, the plant was revalued upwards by $7000 to its fair value on that day. Additionally, its useful life and residual value were re-estimated to 9 years and $18 000 respectively. The following transactions occurred during the year ended 30 June 2024. (Note: All payments are made in cash.) (i) On 10 August 2023 new irrigation equipment was purchased from Pond Supplies for $37000. On 16 August 2023, the business paid $500 to have the equipment delivered to the turf farm. William Wagtail was contracted to install and test the new system. In the course of installation, pipes worth $800 were damaged and subsequently replaced on 3 September. The irrigation system was fully operational by 19 September and William Wagtail was paid $9600 for his services. The system has an estimated useful life of 4 years and a residual value of $0. (ii) On 1 December 2023, the turf cutter was traded in on a new model worth $80 000. A trade-in allowance of $19 000 was received and the balance paid in cash. The new machine’s useful life and residual value were estimated at 6 years and $5000 respectively. (iii) On 1 January 2024, the turf farm’s owner 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 $49 000. The extension is expected to increase the useful life of the building by 4 years and increase its residual value by $5000. (iv) On 30 June 2024, depreciation expense for the year was recorded. The fair value of the water desalination plant was $165 000. Required Prepare general journal entries to record the transactions and events for the reporting period ended 30 June 2024 in relation to the following assets: Office building Turf cutters Water desalinator Irrigation equipment What choices of measurement model exist subsequent to assets being initially recognised? Why should an entity consider changing to an alternative measurement model?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 9MCQ: Chapman Inc. purchased a piece of equipment in 2018. Chapman depreciated the equipment on a...

See similar textbooks

Related questions

Concept explainers

Topic Video

Question

Question 2

Swift Ltd owned the following items of property, plant and equipment as at 30 June 2023.

Additional information (at 30 June 2023)

The straight-line method of depreciation is used for all depreciable items of PPE. Depreciation is charged to the nearest month and all figures are rounded to the nearest dollar.
The office building was constructed on 1 April 2019. Its estimated useful life is 20 years and it has an estimated residual value of $40 000.
The turf cutter was purchased on 21 January 2020, at which date it had an estimated useful life of 5 years and an estimated residual value of $3200.
The water desalinator was purchased and installed on 2 July 2022 at a cost of $200 000. On 30 June 2023, the plant was revalued upwards by $7000 to its fair value on that day. Additionally, its useful life and residual value were re-estimated to 9 years and $18 000 respectively.

The following transactions occurred during the year ended 30 June 2024. (Note: All payments are made in cash.)

(i) On 10 August 2023 new irrigation equipment was purchased from Pond Supplies for $37000. On 16 August 2023, the business paid $500 to have the equipment delivered to the turf farm. William Wagtail was contracted to install and test the new system. In the course of installation, pipes worth $800 were damaged and subsequently replaced on 3 September. The irrigation system was fully operational by 19 September and William Wagtail was paid $9600 for his services. The system has an estimated useful life of 4 years and a residual value of $0.
(ii) On 1 December 2023, the turf cutter was traded in on a new model worth $80 000. A trade-in allowance of $19 000 was received and the balance paid in cash. The new machine’s useful life and residual value were estimated at 6 years and $5000 respectively.
(iii) On 1 January 2024, the turf farm’s owner 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 $49 000. The extension is expected to increase the useful life of the building by 4 years and increase its residual value by $5000.
(iv) On 30 June 2024, depreciation expense for the year was recorded. The fair value of the water desalination plant was $165 000.

Required

Prepare general journal entries to record the transactions and events for the reporting period ended 30 June 2024 in relation to the following assets:

Office building
Turf cutters
Water desalinator
Irrigation equipment

What choices of measurement model exist subsequent to assets being initially recognised?
Why should an entity consider changing to an alternative measurement model?

Expert Solution

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.