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QUESTION 1. In the 30 June 2016 annual report of Cornet Ltd, the machinery was reported...

QUESTION 1.

In the 30 June 2016 annual report of Cornet Ltd, the machinery was reported as follows:

Machinery (at cost)

$310,000

Accumulated depreciation

($130,000)

$180,000

The machinery is measured using the cost model and is depreciated on a straight-line basis over a 10-year period. The residual value is zero.

On 31 December 2016, the directors of Cornet Ltd decided to change the basis of measuring the equipment from the Cost model to the Revaluation model. The machine was revalued to $180,000 with an expected useful life of 6 years.

At 30 June 2017, the machinery was assessed to have a fair value of $163,000 with an expected useful life of 5 years.

Required:

Prepare the journal entries during the period 1 July 2016 to 30 June 2018 in relation to the machinery.

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