On 1 July 2017, Entity A purchased a chemical machine from Entity B on credit. The purchase price was $4,560,000 and it will be fully settled on 1 August 2017. A legal and professional fee of $35,500 was paid by a cheque to Entity C in order to ensure the machine can be ready for use on 1 July 2017. The economic life of the machine is 5 years without any residual value.

According to the purchase contract, Entity A is required to remove the plant on 30 June 2022 and Entity A estimated the dismantling costs of the plant will be $55,123 on that day. Entity A considered that a discount rate of 10.50% is appropriate for the calculation of present value.

On 30 June 2022, the actual dismantling costs were only $45,600 and they were paid by a direct bank transfer to Entity D.

On 1 July 2022, a recycling company, Entity E, purchased all the machine scraps for $32,500 on credit and agreed to pay in full on 16 July 2022.

REQUIRED:

According to relevant accounting standards, prepare journal entries to record the transactions of Entity A from 1 July 2017 and 16 July 2022.

ACCOUNTS FOR INPUT:

| Machine | Land | Building | Bank | Payable | Receivable | Retained earnings | Share capital | No entry |

| Other income | Other expense | Interest expense | Interest revenue | Depreciation | Accum. depreciation |

| Restoration liability | Loss on disposal | Gain on disposal | Revaluation surplus | Revaluation deficit |

ANSWERS:

Journal Entries:

Date	Account Name	Debit ($)	Credit ($)	Hints For Sequence
1-Jul-17				-
				Entity B-related. Judge Dr/Cr. Only enter amount.
				Entity C-related. Judge Dr/Cr. Only enter amount.
				-
1-Aug-17				-
				-
30-Jun-18				-
				A Removal-related Liability.
				-
				-
30-Jun-19				-
				A Removal-related Liability.
				-
				-
30-Jun-20				-
				A Removal-related Liability.
				-
				-
30-Jun-21				-
				A Removal-related Liability.
				-
				-
30-Jun-22				-
				A Removal-related Liability.
				-
				-
30-Jun-22				End of Asset Life.
				-
30-Jun-22				Entity D-related.
				P/L item. Judge Dr/Cr. Only enter amount.
				-
1-Jul-22				Entity E-related.
				-
16-Jul-22				-
				-