Question
Part B Answer all the questions 5 questions 40 marks QUESTION 1 - (7 MARKS) Mybank Ltd acquired some machinery at a cost of $2
Part B
Answer all the questions
5 questions 40 marks
QUESTION 1 - (7 MARKS)
Mybank Ltd acquired some machinery at a cost of $2 000 000. As at 30 June 2022 the machinery had accumulated depreciation of $400 000 and an expected remaining useful life of four years.
On 30 June 2022 it was determined that the machinery could be sold at a price of $1 200 000 and that the costs associated with making the sale would be $50 000. Alternatively, the machinery is expected to be useful for another four years and it is expected that the net cash flows to be generated from the machine would be $390 000 over each of the next four years.
It is assessed that at 30 June 2022 the market would require a rate of return of 6 per cent on this type of machinery.
REQUIRED
- Explain and show calculations of why an impairment loss needs to be recognised in relation to the machinery. (3 marks)
Type answer here
- Provide the appropriate journal entry at 30 June 2022 to account for the impairment. (2 marks)
Type answer here
- Provide the journal entry to account for depreciation in 2023. (2 marks)
Type answer here
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