Acquisitions, disposals, trade‐ins, overhauls, depreciation   LO2, 3, 4, 5, 6, 7 River Song is the owner of Kestrel Fishing Charters. The business’s final trial balance on 30 June 2019 (end of the reporting period) included the following balances. Processing plant (at cost, purchased 4 April 2017) $ 148 650 Accumulated depreciation — processing plant (81 274) Charter boats 291 200 Accumulated depreciation — boats (188 330) The following boats were owned at 30 June 2019. Boat Purchase date Cost Estimated useful life Estimated residual value 1 23 February 2015 $62 000 5 years $3 000 2 9 September 2015 $66 400 5 years $3 400 3 6 February 2016 $78 600 4 years $3 600 4 20 April 2017 $84 200 6 years $3 800 Kestrel Fishing Charters calculates depreciation to the nearest month using straight‐line depreciation for all assets except the processing plant, which is depreciated at 30% using the diminishing balance method. Amounts are recorded to the nearest dollar. Required 1. Prepare general journal entries (with narrations) to record the transactions and events for the year ended 30 June 2020. 2. Assume the transactions and events listed in

(a) to

(d) below occurred during the year ended 30 June 2020. Prepare general journal entries (with narrations) to record the transactions and events for the year ended 30 June 2020, incorporating the information detailed in

(a) to (d). 2019

(a) July 26 Traded in Boat 1 for a new boat (Boat 5) which cost $84 100. A trade-in allowance of $8900 was received and the balance was paid in cash. Registration and stamp duty costs of $1500 were also paid in cash. River Song estimated Boat 5’s useful life and residual value at 6 years and $4120 respectively.

(b) Dec. 4 Overhauled the processing plant at a cash cost of $62 660. As the modernisation significantly expanded the plant’s operating capacity and efficiency, River Song decided to revise the depreciation rate to 25%. 3. On 26 March, River Song was offered fish‐finding equipment with a fair value of $9500 in exchange for Boat 2. The fish‐finder originally cost its owner $26 600 and had a carrying value of $9350 at the date of offer. The fair value of Boat 2 was $9100. If River Song accepts the exchange offer, what amount would the business use to record the acquisition of the fish‐ finding equipment? Why? Justify your answer by reference to the requirements of AASB 116/ IAS 16 relating to the initial recognition of a PPE item.