Reference no: EM133025094
Question - Grace Ltd acquired two new machines for cash on 1 January 2017. The cost of machine A was $200 000, plus GST, and of machine B, $480 000, plus GST. Each machine was expected to have a useful life of 10 years, and residual values were estimated at $30 000 for machine A and $50 000 for machine B.
Because of technological advances, Grace Ltd decided to replace machine A. It traded in machine A on 31 March 2021 for a new machine, C, which cost $300 000. A $80 000, 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 12 years and a residual value of $40 000.
On 2 July 2021, extensive repairs were carried out on machine B for $66 000 cash plus GST. Grace Ltd expected these repairs to extend machine B's useful life by 4 years and residual value remained the same. Machine B was eventually sold on 1 April 2023 for $200 000, plus GST, cash.
On 1 July 2023, Grace Ltd decided to use the revaluation model for valuation of Machine C. The fair value of Machine C was assessed to be $200 000 and the future useful life was estimated to be 5 years, residual value remains the same.
Grace Ltd 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 2024. Round your answers to nearest whole number.