Question

At 1 July 2014, Lobstar Ltd acquired the following non-current assets:
Equipment $100 000
Vehicles $80 000
They are in different classes of non-current assets and are to be measured at fair value. The expected useful lives of vehicles and equipment are 5 years and 10 years, respectively.
At 30 June 2015, the fair values of both assets were assessed. The equipment had a fair value of $82 000, and the vehicles, $70 000. The remaining useful lives were assessed to be 8 years for equipment and 7 years for vehicles.
Required
Prepare the journal entries for Lobstar Ltd for the years ending 30 June 2015 and 2016

Answer 1

JOURNAL ENTRIES

Date	Account Titles	Debit	Credit
1 July 2014	Equipment	$100000
	Vehicle	$80000
	Cash		$180000
( Being purchase of equipment and vehicle for cash )
30 June 2015	Depreciation - Vehicle	$16000
	Accumulated Depreciation - Vehicle		$16000
( Being depreciation charged for the year on vehicle )
30 June 2015	Accumulated Depreciation - Vehicle	$16000
	Vehicle		$16000
(Being vehicle written down to carrying value$64000)
30 June 2015	Vehicle	$6000
	Gain on revaluation of vehicle		$6000
( Being vehicle revalued to $70000 )
30 June 2015	Depreciation - Equipment	$10000
	Accumulated Depreciation - Equipment		$10000
( Being depreciation charged for the year on equipment )
30 June 2015	Accumulated Depreciation - Equipment	$10000
	Equipment		$10000
( Being equipment written down to carrying value $90000 )
30 June 2015	Loss on revaluation	$ 8000
	Equipment		$ 8000
( Being equipment revalued to $ 80000 )
30 June 2016	Depreciation - Vehicle	$ 10000
	Accumulated Depreciation - Vehicle		$ 10000
( Being depreciation charged for the year on vehicle )
30 June 2016	Accumulated Depreciation - Vehicle	$ 10000
	Vehicle		$ 10000
( Being vehicle written down to carrying value $ 60000 )
30 June 2016	Depreciation - Equipment	$ 10250
	Accumulated Depreciation - Equipment		$ 10250
( Being depreciation charged for the year on equipment )
30 June 2016	Accumulated Depreciation - Equipment	$ 10250
	Equipment		$ 10250
( Being equipment written down to carrying value $ 71750 )

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