Bears and Things Acquired a Toy-Stuffing Machine at a Cost

question 3

Multiple Choice

Bears and Things acquired a toy-stuffing machine at a cost of $150 000 on 1 July 2009.The machine had a useful life of 10 years and a residual value of $30 000.The benefits from the machine are expected to be derived evenly over its life.On 1 July 2011 the asset's fair value is $110 000 and the salvage value and useful life are expected to be unchanged (that is,there is 8 years of remaining life) .On 30 June 2009 the machine is sold for $60 000 cash.What are the journal entries required to record the depreciation for the year ended 30 June 2009 and the sale of the machine in accordance with AASB 116 if: (a) the revaluation is undertaken and (b) the revaluation is not recorded?

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Definitions:

Cost Driver

A factor that causes a change in the cost of an activity, such as machine-hours or labor hours, used in determining pricing and profitability.

Flexible Budgets

Budgets that adjust or flex with changes in the volume or level of activity.

Measure of Activity

An identifier used to gauge the level or intensity of activity within a certain process or system.

Planning Budget

A budget designed for a specific level of activity, often used as a tool for performance evaluation and cost management.