Question

Rupert Cooper operates a flying school out of Moorabbin Airport that provides flight training lessons to...

Rupert Cooper operates a flying school out of Moorabbin Airport that provides flight training lessons to student pilots in Victoria. The following transactions relate to a Cessna airplane that was purchased by the business on 1 July 2014. The business is registered for GST and the GST rate is 10%.

1 July 2014

On 1 July 2014, a new Cessna airplane was purchased for $180,000 (plus GST). The Cessna airplane is depreciated using the straight-line depreciation method and the Cessna airplane has an estimated useful life of 12 years with a residual value of $30,000.

1 July 2019

On 1 July 2019, due to the government increasing the import duty on

airplanes, the value of Cessna airplanes has increased. At the same

time, Rupert Cooper decided to change accounting for the Cessna

airplane from the cost model to the revaluation model. Consequently,

the estimated fair value of the Cessna airplane is now $17,500 higher

than its current carrying amount as at 1 July 2019. The depreciation

method and the expected useful life of the Cessna airplane have not

changed. However, it was decided that the residual value of the Cessna

airplane at the end of its useful life will be $44,000.

REQUIRED:

(e) Prepare the necessary journal entries to revalue the Cessna airplane as at 1 July 2019.

(f) Prepare the journal entry to record the depreciation of the Cessna airplane for the year

      ended 30 June 2020.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

JOURNAL ENTRIES IN THE BOOKS OF RUPERT COOPER

e)Journal entry to revalue Cessna Plane as at 1ST July 2019

$ $

Cessna Plane 17500

To Revaluation Surplus 17500

(revaluation profit is not considered as normal profit)

f)Journal entry to record depreciation on 31/june/2020

$ $

Depreciation 13000

To Cessna Plane 13000

(The plane has a useful life of 12 years and uses straight-line depreciation. Yearly depreciation is hence $(180000-30000)/12 or $12,500. Accumulated depreciation as at 30/june /2019 is $12500*5 or $62500 and the carrying amount is $180000 minus $62500 which equals $117500,

Book Value as on 1/july/2019 is $117500+17500=$135000

Therefore, Depreciation for remeaning usefull life is calculated

ie,(135000-44000)/7=$13000))

NOTE:Considered $180000 including GST)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
PART B Rupert Cooper operates a flying school out of Moorabbin Airport that provides flight training...
PART B Rupert Cooper operates a flying school out of Moorabbin Airport that provides flight training lessons to student pilots in Victoria. The following transactions relate to a Cessna airplane that was purchased by the business on 1 July 2014. The business is registered for GST and the GST rate is 10%. 1 July 2014 On 1 July 2014, a new Cessna airplane was purchased for $180,000 (plus GST). The Cessna airplane is depreciated using the straight-line depreciation method and...
Aussie Furniture Removals Limited provides furniture removal services in Australia. The following transactions relate to the...
Aussie Furniture Removals Limited provides furniture removal services in Australia. The following transactions relate to the purchase of a new delivery truck. Aussie Furniture Removals Limited is registered for GST and the GST rate is 10%. 1 July 2019 On 1 July 2019, a new delivery truck was purchased. The delivery truck had a recommended retail price of $165,000 (excluding GST), but after careful negotiation, it was purchased for $158,000 (excluding GST). The company also paid stamp duty of $5,000...
Hurdy Electronics has a financial year end of June 30. The following are transactions related to...
Hurdy Electronics has a financial year end of June 30. The following are transactions related to a new machine it purchasedon July 1, 2013 and subsequent costs and events: 2013 July 1 : Purchased a new machine. The machine had a recommended Gross retail price of $55,000, but after careful negotiation it was purchased for $51,700(including GST).The delivery of the machine cost $1,650 (inc. GST) and installation was $2,750 (inc. GST). The machine was purchased on credit but the delivery...
Question 1                                        &nbsp
Question 1                                                                                                                                                             An item of depreciable machinery is acquired on 1 July 2015 for $400 000. It is expected to have a useful life of 10 years and a zero-residual value (straight-line basis). On 1 July 2019, it is decided to revalue the asset to its fair value of $300 000. Required Provide journal entries to account for the revaluation
Problem Two: Ignore GST. Assume annual accounting periods ending on June 30. On January 1, 2014,...
Problem Two: Ignore GST. Assume annual accounting periods ending on June 30. On January 1, 2014, Malkin Ltd bought a building for $3,000,000; its useful life was 30 years, its residual value nil, and the straight-line method would be used for depreciation. The cost model was adopted. On June 30, 2016, Malkin Ltd decided to adopt the revaluation model for its building. Required: Calculate the book values of the building on June 30, 2014, June 30, 2015, and June 30,...
Problem 2 Synthetic Fuels Corporation prepares its financial statements according to IFRS. On June 30, 2019,...
Problem 2 Synthetic Fuels Corporation prepares its financial statements according to IFRS. On June 30, 2019, the company purchased equipment for $540,000. The equipment is expected to have a five-year useful life with no residual value. Synthetic uses the straight-line depreciation method for all depreciable assets and chooses to revalue the equipment. Fair value of the equipment was $524,880 at 12/31/2019 and $354,348 at 12/31/2020, respectively. Required: 1.      Calculate the depreciation for 2019 and prepare the journal entry to record it....
On January 1, 2016, Crane Corporation purchased a building to use as its factory, and some...
On January 1, 2016, Crane Corporation purchased a building to use as its factory, and some equipment to manufacture its product. The following information was determined at the time of purchase: Cost Useful Life Residual Value Depreciation Building $2,320,000 20 years $464,000 Double Declining Equipment $1,060,000 25 years $106,000 Straight Line On January 1, 2019, Crane decided to change the depreciation method for the building to the straight-line method, as a result of a change in the pattern of benefits...
At 30 June 2015, the financial statements of McMaster Ltd showed a building with a cost...
At 30 June 2015, the financial statements of McMaster Ltd showed a building with a cost (net of GST) of $324,000 and accumulated depreciation of $164,000. The business uses the straight-line method to depreciate the building. When acquired, the building's useful life was estimated at 30 years and its residual value at $65,000. On 1 January 2016, McMaster Ltd made structural improvements to the building costing $102,000 (net of GST). Although the capacity of the building was unchanged, it is...
(A) On 1 January 2017, Kidal Limited purchased a machine at a cost of $350,000 by...
(A) On 1 January 2017, Kidal Limited purchased a machine at a cost of $350,000 by signing a note payable of $300,000. The remaining $50,000 was paid by cash. The useful life of the machine was estimated to be 5 years with a residual value of $50,000. The machine was expected to produce 200,000 units of products over its 5-year useful life. For the years 2017 and 2018, the machine had produced 50,000 units and 80,000 units of products respectively....
On 2 January 2016, Mentos Ltd purchased a machine for $35 000 plus GST with a...
On 2 January 2016, Mentos Ltd purchased a machine for $35 000 plus GST with a useful life of 5 years and a residual value of $5000. In order to keep the machine running properly, the company has performed regular maintenance and repairs each year since its acquisition. On 30 June 2019, ordinary repairs amounted to $770 plus GST. The company has a 31 December financial year end. On 3 January 2020, Mentos Ltd decided to completely overhaul the machine’s...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT