Acct602 Financial Accounting|Assets Assessment Answer

(a)Kites Apparel Ltd was established on 1 April 2014. On the same date, it bought following machinesto use in the business. The details of the purchase are as follows:MachinesCostUseful lifeResidual valueCutting Machine(CM)$160,00010 years$10,000Fusing Machine(FM)$140,0008 years$12,000Kites Apparel Ltduses the straight-line method to depreciate these machines.Its financial year-end is 31 March.On 31 March2019, an independent valuer assessed the fair values of two machines to be as follows:Cutting Machine(CM)$137,500Fusing Machine(FM)$ 54,000Kites Apparel Ltddecided to revalue these items on 31 March2019. There was no change in the expected useful lives of the machines and residual values.Required:Show the journal entries required at 31 March2019to record the revaluation of each of the assets. Show all workingsrelevant to depreciation to date, carrying values and revaluation increments or decrements(b)On 31 March 2020, Kites Apparel Ltdrevalued the Fusing machineto $58,000 following a review by an independent valuer.The review showed no change to the value of other assets as at 31March 2020. There were no changes to the other details regarding this motor vehicleincluding residual value. Required:Show all workings and the journal entriesrequired at 31 March 2020 to reflect the revaluationof Fusing machine.(c) On 1 June 2020, Kites apparel Ltd sold the Cutting Machinefor $100,000cash.RequiredShow the journal entry required at 1 June2020 to reflect the disposal. Show all workings.(d)On 1 June 2020, it was determined that the Fusing machine could be sold for a price of $48,500 and the costs associated with making the sale would be $3,000. Alternatively, the machineis expected to be useful for another threeyears and the Value in use is calculated as $46,000.RequiredDetermine whether an impairment loss needs to be recognised in relation to the machinery and prepare the journal entry