Rostro Ltd acquired an item of machinery on 1 July 2014 for $250,000. The machinery has a useful life of 10 years and a zero residual value. The machinery is depreciated using the straight-line method and is measured using the cost model.

In relation to the item of machinery, indicators of impairment have been identified for the reporting period ended 30 June 2016 while indicators for a reversal of impairment have been identified for the reporting period ended 30 June 2017. The fair value less costs of disposal and the value in use of the machinery on these dates were:

Date: Fair value less costs of disposal Value in use

30 June 2016. $190,000 $180,000

30 June 2017 $175,000 $176,750

Required:

(a) Provide any necessary journal entries related to the impairment of the item of machinery on 30 June 2016 and 30 June 2017.

(b) Define 'fair value less costs of disposal' and 'value in use'.

(c) Explain and calculate the ceiling beyond which the carrying amount of the machine cannot be increased on 30 June 2017 when reversing the impairment loss.