Kerevi Ltd leases a machine for making dog crates from the Rennie Bank on 1 July 2020. The lease is for 5 years, payment in advance, and the initial lease payment of $80,000 is required at inception and four payments of $80,000 are required in subsequent years and payable 30 June. The implicit interest rate in the lease is 8% pa. At the end of the lease Kerevi retains the machine which has a useful life of 10 years with a salvage value of $80,000.

Unfortunately, during the year ended 30 June 2022 there is less dog travel and there is a fall in the demand for dog crates. At this time, the recoverable amount of the machine s determined to be $180,000. The useful life is now only 5 years and a salvage value of $40,000 is estimated. Kerevi has a 30 June year end.

Record the necessary journals for the following dates:

1 July 2020

30 June 2021

30 June 2022