Reference no: EM132565302
Question - Deduhin Ltd acquired two new machines for cash on 1 January 2017. The cost of machine A was $400 000, plus GST and of machine B, $600 000, plus GST. Each machine was expected to have a useful life of 10 years, and residual values were estimated at $20 000 for machine A and $50 000 for machine B. Because of technological advances, Deduhin Ltd decided to replace machine A. It traded in machine A on 31 March 2021 for a new machine, C, which cost $420 000. A $200 000, plus GST trade-in was allowed for machine A, and the balance of machine C's cost was paid in cash. Machine C was expected to have a useful life of 8 years and a residual value of $20 000.
On 2 July 2021, extensive repairs were carried out on machine B for $66 000 cash. Deduhin Ltd expected these repairs to extend machine B's useful life by 4 years and it revised machine B's estimated residual value to $19 500. Machine B was eventually sold on 1 April 2023 for $300 000, plus GST, cash.
On 1 July 2023, Deduhin Ltd decided to use the revaluation model for valuation of Machine C. The fair value of Machine C was assessed to be $220000 and the future useful life was estimated to be 5 years, residual value remains the same.
Deduhin Ltd uses the straight-line depreciation method, recording depreciation to the nearest whole month. The end of the reporting period is 30 June.
Required - Please make the general journal to record the transaction and also provide a depreciation journal entries required at end of each reporting period up to 30 June 2024.