Question

E8.5 Able Ltd purchased machinery on 1 November 2016 for S160 ooo. The estimated useful life of the machinery is 8 years, with an estimated residual of $10 ooo. The entity's reporting period ends on 30 June, and it uses the straight-line method of depreciation. On 1 July 2017, the value in use was estimated to be $9o ooo and the net selling price was $98 750. Required Prepare the journal entries in relation to the equipment from the date of acquisition. Revaluation and disposal of non-current assets. Balance date 30 June 1 Oct 2016 Equipment Cost $160,000 Estimated Residual 10.000 Depreciable Amount $150,000 Useful life is 8 years depreciation rate 12.5% Depreciation 30/6/2017 $150,000 x 12.5% x8/12 $12,500 Carrying amount 30/6/2017 $160,000 $12,500 *$147,500 Recoverable amount $98,750 is the higher of the net selling price ($98,750) and value in use ($90,000) impairment write down $147,500 $98,750 -$48,750 Carrying amount 30/6/2017 $160,000 $12,500 *$147,500 Recoverable amount $98.750 is the higher of the net selling price ($98,750) and value in use ($90,000) Impaiment write down $147.500 $98.750 $48.750 Journal Entries $160,000 1/10/1 Machinery $160,000 CashPayables (Being purchase) 30/6/17 Depreciation Expense 12,500 12.500 Accumulated Dep n Machinery (Being annual depreciation) 1/7/17 Impairment Loss 48,750 48,750 Accumulated impairment Loss (Being impaiment writedown)