PART B (12 marks)

Vanguard Company acquired a depreciable asset on 1 July 2017 for $500,000, paid in cash. The asset was estimated to have a useful life of ten years and was depreciated on a straight-line basis. Vanguard chose the cost model for accounting for assets in this class. Disposal value at the end of the useful life is zero. Indicators of impairment have been identified for the reporting periods ended 30 June 2018, while indicators for a reversal of impairment have been identified for the reporting period ended 30 June 2019. There was no change in the estimated useful life or the disposal value of the equipment.

The recoverable amounts of the depreciable asset on these days were as follows:

Date Recoverable amount

30 June 2018 $360,000

30 June 2019 $340,000

REQUIRED:

Prepare journal entries, including narrations, relating to this depreciable asset from 30 June 2018 to 30 June 2019, assuming that the company complies with AASB 116 Property Plant and Equipment and AASB 136 Impairment of Assets. Show all workings.