Problem 1 (6 Marks) On 1 January 2015, KZ Ltd purchased equipment for a total cost of $55,000. The estimated
useful life of the equipment was 8 years, with an estimated residual value of $5,000. The
entity's reporting period ends on 30 June, and it uses straight-line depreciation. On 1 July
2017, KZ Ltd revalued the equipment upwards to reflect the fair value of $70,000. The
revised useful life was 7 years and residual value was estimated at $nil. On 1 January 2019,
KZ Ltd sold the equipment for $56,500.
Prepare the following journal entries (assuming no GST):
a) journal entries on 1 July 2017 for the revaluation of the equipment.
b) Journal entry on 30 June 2018 for the depreciation expense.
c) Journal entries on 1 January 2019 for the sale of the equipment.
Solution:
KZ'td