Question

On 30 June 2019, the Statement of Financial Position of Simon Ltd showed the following non-current asset after charging depreciation.

Plant		$800,000
Accumulated depreciation		(400,000)		$400,000

The company has adopted fair value for the valuation of non-current assets. This has resulted in the recognition in previous periods of an asset revaluation surplus for the plant of $28,000. On 30 June 2020, an independent valuer assessed the fair value of the plant to be $320,000 and remaining useful lives of 25 years. On 30 September 2020, the plant was sold for $310,000 cash. Sophie Ltd uses the straight-line method to record depreciation expense.

REQUIRED

Prepare any necessary journal entries for SimonLtd to record revaluation, depreciation and disposal of the Plant as at 30 June 2020 and 2021. (Exclude journal narrations.)

Answer 1

Date	Account Titles	Debit	Credit
June 30, 2019	Plant	28,000
	Revaluation surplus		28,000
June 30, 2020	Revaluation surplus	28,000
	Impairment Losses	80,000
	Plant		28,000
	Accumulated Impairment Losses		80,000
Sep 30, 2020	Depreciation (320,000 / 25) x 3/12	3,200
	Accumulated Depreciation		3,200
Sep 30, 2020	Cash	310,000
	Accumulated Depreciation (400,000 + 3,200)	403,200
	Accumulated Impairment Losses	80,000
	Loss on sale of Plant (320,000 - 3,200 - 310,000)	6,800
	Plant		800,000