Green Ltd. bought a new Machine A on 1 January 2013 for $80,000. Machine A...
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Green Ltd. bought a new Machine A on 1 January 2013 for $80,000. Machine A is estimated to have 10-year useful life and no residual value at the end of its residual life. On 31 December 2014, Machine A was revalued at $70,000. Due to technological progress, Green Ltd. decided to replace Machine A with a new Machine B on 1 July 2015. A $56,000 trade-in allowance on Machine A was given and the remaining was paid in cash. The cost of Machine B was $128,000 and $2,000 transportation and installation costs were incurred in respect to Machine B. Assume the transaction has commercial substance. Green Ltd. use revaluation model for its machines and use straight-line method for depreciation.
Prepare journal entries for the transaction on 1 July 2015.
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