The following information relates to Han Ltd, which has a year-end date of 31 De
ID: 2574026 • Letter: T
Question
The following information relates to Han Ltd, which has a year-end date of 31 December. Ignore GST. 1. On January 2010, an item of machinery that cost S35 000 was sold for $17 600. Under the cost model, the accumulated depreciation up to the date of sale was S18 000. 2. On 1 January 2015, the directors of Han Ltd decide to adopt the revaluation model. At that date the non-current asset class for machinery was as follows Machinery Less: Accumulated depreciatioin $100 000 10 000 $90 000 Based on an independent assessment, the fair value of machinery was $95 000. Required Prepare general journal entries to record: 1. The sale of the item of machinery by Han Ltd on 1 January 2010. (5 marks) 2. The revaluation of the non-current asset class for machinery on 1 January 2015. Include the closing entries at the end of the reporting period. (7 marks)Explanation / Answer
Account Title & Explanations Debit ($) Credit ($) 1) Accumulated Depreciation 18000 Cash 17600 Gain on sale of machinery 600 Machinery 35000 (sale of machinery recorded) 2) Machinery 5000 Revaluation Reserve 5000 (Revaluation of Machinery recorded) Revaluation Reserve 5000 Shareholders' Equity 5000 (Revaluation reserve transferred to shareholders' equity at the end of the reporting period)
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