Journal Entries, Provision and Intangible Assets - Accounting Solutions

Solution-1
Journal Entries in the books of White Ltd.
(Amount in $)
Date Particulars Debit Credit
30 June, 2015 Accumulated depreciation (refer WN-1) 60,000
To Machine 60,000
(To adjust depreciation with cost of asset)
30 June, 2015 Machine (refer WN-1) 45,000
To Revaluation Surplus 45,000
(To record the fair valuation of machine)
30 June, 2016 Accumulated depreciation (refer WN-2) 65,000
To Machine 65,000
(To adjust depreciation with cost of asset)
30 June, 2016 No Journal Entry is required (refer note below)
30 June, 2017 Accumulated depreciation (refer WN-3) 65,000
To Machine 65,000
(To adjust depreciation with cost of asset)
30 June, 2017 Revaluation Surplus 35,000
To Machine 35,000
(To record the fair valuation of machine)
31 Dec, 2017 Depreciation expense 30,000
To Accumulated Depreciation 30,000
(To record depreciation upto date of sale)
31 Dec, 2017 Accumulated Depreciation 30,000
To Machine 30,000
(To adjust depreciation with cost of asset)
31 Dec, 2017 Bank 500,000
To Machine 490,000
To Gain on sale of machine (refer WN-4) 10,000
(To record sale of machine)

Note: Since, the carrying value and fair value of the machine is same (i.e. $620,000 (refer WN-2)) as on
30 June, 2016, hence no entry is required.
WN-1 Calculation of value of the machine as at 30 June 2015
Date of Acquisition 01-Jul-14
Cost $700,000
Useful life 10
Residual value $100,000
Cost
Cost $700,000
Less: Depreciation for the year $60,000
WDV as on 30 June, 2015 $640,000
Fair value $685,000
Revaluation Surplus $45,000
WN-2 Calculation of value of the machine as at 30 June 2016
Remaining Useful life 9
Opening WDV $685,000
Less: Depreciation for the year $65,000
Closing WDV $620,000
Fair value $620,000
Revaluation Surplus $0
WN-3 Calculation of value of the machine as at 30 June 2017
Remaining Useful life 8
WDV $620,000
Less: Depreciation for the year $65,000
WDV as on 30 June, 2015 $555,000
Fair value $520,000
Revaluation Surplus ($35,000)

WN-4 Calculation of gain on sale of the machine as at 31 December 2017
Remaining Useful life 7
Opening WDV $520,000
Less: Depreciation for the period $30,000
Closing WDV $490,000
Sale value $500,000
Gain on sale $10,000