vvv Limited purchased a machine for $300,000 cash on 1 July 2005. The useful life of the machine is 10 years, no residual value and straight line method for depreciation. The company uses the revaluation model. On 31 December 2005, the fair value was $332,500 for the machine. On 31 December 2006, the fair value was $280,500 for the machine. The machine has a fair value of $302,250 on 31 December 2007 and $250, 950 on 31 December 2008. Required: Provide the journal entries related to machine.

vvv Limited purchased a machine for $300,000 cash on 1 July 2005. The useful life of the machine is 10 years, no residual value and straight line method for depreciation. The company uses the revaluation model. On 31 December 2005, the fair value was $332,500 for the machine. On 31 December 2006, the fair value was $280,500 for the machine. The machine has a fair value of $302,250 on 31 December 2007 and $250, 950 on 31 December 2008. Required: Provide the journal entries related to machine.

Name: vvv Limited purchased a machine for $300,000 cash on 1 July 2005. The
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Description: vvv Limited purchased a machine for $300,000 cash on 1 July 2005. The useful life of the machine is 10years, no residual value and straight line method for depreciation. The company uses the revaluationmodel. On 31 December 2005, the fair value was

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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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vvv Limited purchased a machine for $300,000 cash on 1 July 2005. The useful life of the machine is 10
years, no residual value and straight line method for depreciation. The company uses the revaluation
model. On 31 December 2005, the fair value was $332,500 for the machine. On 31 December 2006,
the fair value was $280,500 for the machine. The machine has a fair value of $302,250 on 31 December
2007 and $250,950 on 31 December 2008. Required: Provide the journal entries related to machine.

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