Scenario 2 Property, Plant and Equipment
ChiHerbal Ltd had the following information regarding its equipment as at 30 June 2015:
| Equipment (at cost) | $520,000 | |
| Accumulated depreciation | 150,000 | |
| 370,000 |
The equipment consisted of two machines, Machine A and Machine B. Machine A had cost $310 000 and had a carrying amount of $190 000 at 30 June 2015, and Machine B had cost $210 000 and was carried at $180 000. Both machines are measured using the cost model, and depreciated on a straight-line basis over a 10-year period.
On 31 December 2015, the company’s directors decided to change the basis of measuring the equipment from the cost model to the revaluation model. Machine A was revalued to $190 000 with an expected useful life of 6 years, and Machine B was revalued to $165 000 with an expected useful life of 5 years.
At 30 June 2016, Machine A was assessed to have a fair value of $173 000 with an expected useful life of 5 years, and Machine B’s fair value was $146 500 with an expected useful life of 4 years.
Required:
Prepare general journal entries to record the above transactions.
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