Question 1: On 1 July 2017, Reliance Ltd paid $66 000 for a machine with a useful life of 5 years and a residual value of $6000. The machine was sold on 31st December 2020 for $20000. Ignore GST.

Required:

Prepare the journal entries to record depreciation and the sale of the machine on 31st December 2020. Use the straight-line depreciation method

(Hint: Calculate accumulated depreciation balance on the date of sale i:e 30th December 2020)

Question 2: Dove Ltd purchased new equipment on 1 July 2016, at a cost of $500,000. The company estimated that the equipment has a residual value of $80,000. The equipment is expected to be used for 6 years.

Required:

Assuming the financial year ends on 30 June, calculate the depreciation expense using sum-of-years digit methods for years ended 2018 to 2020. Please show the calculation of the sum-of-years digit and depreciable amount. Note: The depreciation table is not required. (4 Marks)