Reference no: EM132751142

One Ltd has, in its record on 30 June 2019, a vehicle with a carrying amount of $60,000 and remaining useful life of 3 years. The vehicle was determined to have recoverable amounts of $57,000 and $40,500 on 30 June 2019 and 30 June 2020, respectively. The accountant of One Ltd also found that if One Ltd were to sell the vehicle on 30 June 2019, the net amount from the sale would be $56,000.

In addition to the vehicle, One Ltd has also purchased a machine for $400,000 on 1 January 2017. One Ltd has recorded an impairment of $3,000 for the year ended 30 June 2019. There was no change in the useful life of the machine after it was impaired in 2019. The value in use and fair value less cost to sell of the machine on 30 June 2020 are $250,000 and $255,000, respectively.

Additional information:

1. One Ltd applies the cost model following IAS 36/AASB 136 Impairment of Assets requirements.
2. One Ltd depreciates all of its items of Property, Plant & Equipment using a straight-line method over 10 years
3. Tax rate applicable is 30%.

Required:

Problem 1: Prepare journal entries to record the transactions on 30 June 2019 and 30 June 2020 in accordance to IAS 36/AASB 136 Impairment of Assets requirements.