On 1 January 2014, Nicolaidis Ltd purchased two identical new machines at a total cost of $700 000 plus GST. It was estimated that the machines would have a useful life of 10 years and a residual value of $50 000 each. Nicolaidis Ltd uses the straight-line method of depreciation for all of its equipment. The company’s end of reporting period is 31 December.

Required

A. Record the purchase of the trucks on 1 January 2014.

B. Record the depreciation expense on the trucks for 2019.

C. Assume that early in 2020 the company revalued the machines upwards by $80 000 each and assessed that the machines would last 6 more years instead of 4 but that the residual value would be $80 000. Record all journal entries for the trucks in 2020.

D. Make the necessary entries to record the sale of one of the machines on 31 December 2020. The machine was sold for $200000 plus GST. (Assume that the two machines had the same carrying amount, which equalled their fair values at this date.)

E. How much depreciation expense would be recorded on the second machine during 2025 if it were still being used and if its residual value were still $50000? Why?