Revaluation reserve and depreciation
On 01 September 2006 company X wrote off old equipment that had been fully depreciated and purchased new equipment on the same date.The replacement equipment cost 870, 000. After some necessary alterations (to the value of 50, 000) were made, the equipment was brought into use on 01 October 2006.
Fair value of equipment:
950, 000 on 31 march 2008
650, 000 on 31 march 2009
820, 000 on 31 march 2010
Company X uses revaluation model for all assets, and revaluations are done annually at the end of the year with reference to fair value.
Equipment is depreciated at 10% and accumulated depreciation is eliminated against the gross carrying amount immediately prior to revaluations.The realised portion of the revaluation reserve is transferred to retained earnings.
Required:
Journalise all the relevant transactions for the reporting period ended 31 march 2009 and 31 march 2010.
