Question 5 (23 marks) Sia Ltd is preparing its end of year financial statements at 30 June 2016

Question 5 (23 marks)

Sia Ltd is preparing its end of year financial statements at 30 June 2016. The balance sheet shows only two non-current assets, motor vehicles and equipment. Afterdepreciation entries were completed for the year ending 30 June 2016, the accumulated depreciation of its non-current assets were as follows:

                                                                                          $             

Equipment                                                                  242,000

Accumulated Depreciation                                          (50,000)

Motor vehicles                                                             70,000

Accumulated Depreciation                                         (38,000)          

The company applies the revaluation model to equipment and the cost model to motor vehicles. At 30 June 2016, the following values relating to the assets have been determined:

Fair value                    Value in use                Costs to sell

Equipment                             $ 155,000                    $156,000                     $ 6,000            

Motor vehicles                        $   15,000                    $  14,000                     $ 2,000

The revaluation surplus account had an opening balance of $15,000 credit as at 30 June 2016.

Required:

1. Prepare the necessary general journal entries in relation to the equipmentfor the year ended 30 June 2016 and justify in accordance with appropriate accounting standards. Show all workings (narrations are notrequired). [7 marks]
2. Prepare the necessary general journal entries in relation to the motor vehiclefor the year ended 30 June 2016 and justify in accordance with appropriate accounting standards. Show all workings (narrations are notrequired). [6 marks]
3. For the year ended 30 June 2017, prepare the necessary general journal entries in relation to the equipment (assuming depreciation for the year is $10,000 and the fair value of the equipment at 30 June 2017 was $250,000).[10 marks]