Prestige Printing Ltd commenced business on 1 July 2019. On 5 July 2019, a printing machine was purchased for $35 000, payable in two equal instalments due on 1 August and 1 October 2019. Transport costs of $1200 were paid in cash to deliver the machine to Prestige Printing Ltd’s premises. The machine was expected to have a useful life of 5 years and a residual value of $3000.

On 22 September 2019, the business purchased a second‐hand truck for $26 000. Stamp duty amounted to $700. The truck dealer also fitted four new tyres at a cost of $1200 and spraypainted the business logo on the truck doors at a cost of $500. All amounts were paid in cash. The truck was expected to have a useful life of 3 years and a residual value of $5000.

On 1 March 2020, extensive repairs were carried out on the printing machine at a cost of $18 230, paid in cash. The company expects these repairs to extend the machine’s useful life by 2 years. The residual value was revised to $4000. The carrying amount of the parts replaced in the machine was considered to be equal to $14 000.
The company uses the straight‐line depreciation method, recording depreciation to the nearest month. The end of its reporting period is 30 June. Ignore GST.

Required

(a) Prepare general journal entries (narrations are not required, but show all workings, rounding all amounts to the nearest dollar) to record the above transactions and to record depreciation adjustments necessary for the year ended 30 June 2020.

(b) Justify the value you recognised as the cost of the second‐hand truck purchased on 22 September 2019 by reference to the requirements of IAS 16/AASB 116.