Fabricate Ltd purchased machinery on 2 January 2019, at a cost of $800 000 by taking out a bank loan for the full amount. The machinery is depreciated using the straight-line method over a useful life of 8 years with a residual value of $80 000.

On 3 January 2022, an overhaul of the machinery was made at a cost of $112 000 on account. Because of this overhaul, the useful life was re-estimated at 4 years from 3 January 2022, and the residual value was amended to $40 000. The carrying amount of parts replaced was considered to be $10 000.

Required

(a) Assuming the financial year ends on 31 December, prepare journal entries to record:

i. the purchase of the machinery on 2 January 2019 ii. depreciation expense for 2019, 2020 and 2021

iii. the overhaul expenditure on 3 January 2022

iv. depreciation expense for 2022.