Max Ltd acquires an item of machinery on 1 July 2016 for a total acquisition cost of $61,000. The life

of the asset is assessed as being six (6) years, after which time Max Ltd expects to be able to dispose

of the asset for $6,000. It is expected that the benefits will be generated in a pattern that is best

reflected by the sumofdigits depreciation approach. On 1 July 2019, owing to unforeseen

circumstances, the machinery is exchanged for a motor vehicle. Note the motor vehicle is two years

old, originally cost $17,000 and has a fair value of $11,000.

Required:

Provide the necessary journal entries for the disposal of the machinery and the acquisition of the

motor vehicle on 1 July 2019