Prepare all appropriate journal entries

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Question - On the 1 July 2017, Cadbury Chocolates Ltd purchased some chocolate manufacturing equipment at a cost of $1,000,000 cash. They immediately spent an additional $100,000 installing the equipment before they could use it. The equipment had a useful life of 10 years and an estimated residual value of $100,000. The company uses the straight-line depreciation method.

On the 1 July 2018, the equipment broke down and the company spent $40,000 returning it to working order.

The company decided on 1 July 2019 to modify the equipment to enable it to produce at 5 times the previous volume of chocolate. The modifications cost $400,000 cash and did not change the useful life of the equipment.

Required - Prepare all appropriate journal entries for the financial years ending June 2018, 2019 and 2020. Show all calculations. Justify your answers and assumptions.

Reference no: EM132981249

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