Reference no: EM131796653

Problem

Deduhin Ltd acquired two new machines for cash on 1 January 2014. The cost of machine A was $400 000, and of machine B, $600 000. 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 machine A on 31 March 2018 for a new machine, C, which cost $420 000. A $200 000 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 2018, 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 balue to $19 500. Machine B was eventually sold on 1 April 2010 for $300 000 cash. Deduhin uses the STRAIGHT-LINE depreciation method, recording depreciation to the nearest whole month. The end of the reporting period is 30 June.

REQUIRED: Prepare general journal entries to record the above transactions and depreciation journal entries required at the end of each reporting period up to 30 June 2020.