Assignment
On 1 January 2011, Punchbowl Ltd bought a machine for $33 000 cash; its useful life was 12 years and its residual value was $3000. It was decided to depreciate the machine by the straight-line method. On 30 September 2013, themachine was traded in to Leichhardt Ltd for a new model, the total cost being $25 000. Leichhardt Ltd allowed $17 000 for the old machine. It was decided to depreciate the new machine at the rate of 45% p.a. by the diminishing-balance method. Residual value ofthenewmachinewas $7000.
On 1 July 2014, Punchbowl Ltd decided to adopt the revaluation model and revalue its machine upwards to reflect fair values. This represented a 15% increase in the carrying amount of the machine. The diminishing-balance method of depreciation was continued at the same rate. The accounting period ended on 30 June each year. At 30 June 2015, the carrying amount of the machinewasapproximatelyequaltofairvalue.
Required
A. Prepare relevant ledger accounts to record the above transactions up to 30 June 2015. Ignore GST.
B. Show how the asset would appear in the financial statements of Punchbowl Ltd as at 30 June 2012, 30 June 2014 and 30 June 2015.
C. Show theMachinery account andAccumulated Depreciation -Machinery account if the revalu• ation on 1July 2014 had been downwards instead of upwards.