Zoot Ltd purchased a new drilling machine from a Taiwanese manufacturer costing $355,000 on 1 July 2018. Zoot also incurred the following cost in relation to the purchase of the drilling machine during the current financial year ending 30 June 2019:

$10,400 on import duties and taxes

$8,600 on transportation to Zoot Ltd.s factory

$15,000 on installation cost of drilling machine

$1,500 on servicing machine, at the end of each month

The drilling machine is carried at cost and has 12 years of useful life and 30,500 residual

value.

REQUIRED:

Determine the cost of acquisition of the new drilling machine in accordance with AASB116: Property, Plant and Equipment. Explain the reason for including and excluding the cost listed above. (2.5 marks)

Prepare journal entries to account for the new drilling machine on 1 July 2018 and on 30 June 2019. (3 marks)

On 30 June 2021, the accountant provided the following valuations for the drilling machine:

Value in use of the drilling machine

$269,000

Net selling price

$285,000

As per AASB 136 Impairment of assets, determine the amount (if any) of impairment loss to be recognized at 30 June 2021 by Zoot. (Show all workings supporting your answer) .