Entity A is a listed company in Hong Kong selling computer accessories.

The draft accounts for the year ended 31 December 2014 included a motor van with the cost of $986,000 which was bought on 1 January 2012. Its economic life is assumed to be 8 years.

However, the market has suddenly turned down on 31 December 2014. As a result, the motor van was estimated that it could only be able to generate $125,000 cash at each year-end of 2015, 2016, 2017, 2018 and 2019 respectively. It will then be scrapped on 31 December 2019 with a scrap value of $12,550. Alternatively, the motor van could be sold immediately on 31 December 2014 for $565,400 and $95,000 selling costs incurred.

In addition, the recoverable amounts on 31 December 2015 and 31 December 2016 are estimated as $386,200 and $365,200 respectively.

On 1 January 2016, Entity A changed the depreciation method from the straight-line method to the reducing balance method of 20% annually.

Eventually, Entity A sold the motor van for $365,400 on 31 December 2017

The discount rate is 12.00%. The end of the reporting period is 31 Dec.

REQUIRED:

According to the relevant accounting standards, provide all necessary journal entries of Entity A on 31 December 2014, 31 December 2015, 31 December 2016 and 31 December 2017.

ACCOUNTS FOR INPUT:

| Road roller | Plant | Machine | Motor van | Land | Building | Inventory | Intangible assets | Bank |

| Payable | Receivable | Retained earnings | Other income | Other expense | Interest expense | Interest revenue |

| Depreciation | Accum. depreciation | Impairment loss | Reversal of impairment loss | Loss on disposal | Gain on disposal |

| Restoration liability | Goodwill | Revaluation surplus | Revaluation deficit | No entry |

Can ignore the number entries >

Credit ($) Hints For Sequence 2958000 515600 0 2958000 17000 0 ANSWERS: Journal Entries: Date Account Name Debit (5) 31-Dec-14 Accum. depreciation 2958000 Motor van 31-Dec-14 Impairment loss 515600 Motor van No entry 0 No entry 31-Dec-15 Accum depreciation 2958000 Motor van 31-Dec-15 Impairment loss 17000 Motor van No entry No entry 31-Dec-16 Accum. depreciation 481168 Motor van 31-Dec-16 No entry No entry No entry 0 No entry 31-Dec-17 Accum. depreciation Motor van 31-Dec-17 Impairment loss Motor van Bank Accum depreciation Loss on disposal 0 481168 0 0 0 Judge Dr/Cr side. Only Enter Amount Judge Dr/Cr side. Only Enter Amount. Judge Dr/Cr side. Only Enter Amount Motor van 986000