journal entries

Journal Entries
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Table of Contents
Scenario............................................................................................................................................3
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Scenario
A machine was purchased at $6,50,000. As on 30th June 2022, it accumulated
depreciation stands at $1,10,000. So, the net machine cost stands at $5,40,000. On, 30th June
2022, its fair value was assessed at $4,50,000 and was thus, revalued creating an impairment loss
of $ 90,000. Its useful life was expected to be 5 more years and the residual value was assessed
at $ 50,000. Accordingly, next year on 30th June 2023 depreciation of $80,000 was provided on
asset on straight line basis. The net machine book value now stands at $3,70,000. On, 01st July,
2023 its fair value was reassessed at $4,60,000 with residual value and useful life stands
unchanged i.e. 4 years. Revaluation was made in books of accounts and machine now stands at
$4,60,000 creating a revaluation reserve of $90,000. This reserve is used to set off impairment
loss.
Journal Book of Takulah Traders
(for the period....)
Date Particulars Amount Debit
(in $)
Amount Credit
(in $)
Machinery Account... Dr.
To Bank Account.................
(Machinery purchased)
650000
650000
30th June 22 Accumulated Depreciation Account... Dr.
To Machine Account............
(Depreciation provided and asset net off in book
value)
110000
110000
01st July 22 Impairment Loss Account... Dr.
To Machine Account............
(Machinery revalued and downward impairment
loss booked)
90000
90000
30th June 23 Depreciation Account... Dr.
To Machine Account...........
(Depreciation provided for whole year on
80000
80000
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machinery)
01st July 23 Machine Account... Dr.
To Revaluation Reserve Account
(Machine revalued and revaluation reserve
account created)
90000
90000
30th June 24 Revaluation Reserve Account... Dr.
To Impairment Loss Account...........
(Impairment loss set off against revaluation
reserve created on upward revaluation)
90000
90000
30th June 24 Depreciation Account... Dr.
To Machine Account.......................
(Depreciation provided for whole year on
machinery)
102500
102500
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