a) Samsung Ltd will record these Journal Entries from July 2016 to June 30, 2021, using the straight-line and revaluation methods of depreciation:
July 1, 2016 Debit Equipment $1,502,000
Credit Cash $1,502,000
- To record the purchase of the machine A.
June 30, 2017 Debit Depreciation Expense $150,000
Credit Accumulated Depreciation $150,000
- To record the depreciation expense for the first year.
June 30, 2018 Debit Depreciation Expense $150,000
Credit Accumulated Depreciation $150,000
- To record the depreciation expense for the second year.
June 30, 2019 Debit Accumulated Depreciation $300,000
Credit Revaluation Reserve $300,000
- To close the accumulated depreciation to Revaluation Reserve.
June 30, 2019 Debit Revaluation Reserve $198,000
Credit Revaluation Surplus $198,000
- To record the Revaluation Surplus.
June 30, 2020 Debit Revaluation Expense $400,000
Credit Revaluation Reserve $400,000
- To record the revaluation loss.
June 30, 2021 Debit Revaluation Reserve $500,000
Credit Revaluation Surplus $500,000
- To record the revaluation surplus.
Data and Calculations:
Cost of machine on July 1, 2016 = $1,502,000
Estimated Residual Value = $2,000
Depreciable amount = $1,500,000
Estimated useful life = 10 years
Based on the straight-line method the depreciation expense for each year = $150,000 ($1,500,000/10).
Value of Machine at:
June 30, 2019 - $1,400,000
June 30, 2020 = $1,000,000
June 30, 2021 = $1,500,000
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