Disposal and revaluation increments and decrements
on 1 January, Dense Ltd bought a machine for $33000 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 30th September 2006, the machine was traded in to Thicket Ltd for a new model, the total cost being $25000. Thicket Ltd allowed $17000 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 of the new machine was $7000.
on 1st July 2007, the company 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 2008, the carrying amount of the machine was approximately equal to fair value.
A. prepare relevant ledger accounts to record the above transasctions up to 30 June 2008.Ignore GST
okay this is as I far as I got with the question.
I worked out the depreciation expense per annum which is:
33000-3000= 30000
30000\12=2500
the figure for accum depreciation is 6875:
Accumulated Depreciation – Machinery
30/9/06 Asset. $6 875 30/6/04 Depreciation $1 250
30/6/05 Depreciation 2 500
30/6/06 Depreciation 2 500
30/9/06 Depreciation 625
6 875 6 875
30/6/07 Depreciation (45% x
1/7/07 Machinery 8 438 $25 000 x 9/12) 8 438
30/6/08 Depreciation (45% x $19 046) 8 571
I'm not sure how they got 1250 and 625? That whole thing just confused me?
any help would be appreciated