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Prepare an extract of the statement of financial position

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Reference no: EM132533060

On 1 July 2019, LongWaves Ltd purchased an item of machinery for $198,000. The machinery has a useful life of 4 years and a residual value of $30,000. The machinery is to be depreciated on a straight-line basis. The following information relates to the purchase of the machinery:

Cash paid for machinery (includes GST $18,000) $198,000

Costs of transporting machinery $4,000

Labour costs of installation by expert fitter $ 3,500

Labour costs of testing machinery $2,500

General insurance costs for 2019-2020 $4,500

Costs of training salesmen to market the new product made by this machinery $2,500

Required

Question 1. Determine the amount that the machinery should be recorded for in the records of LongWaves Ltd at 1 July 2019.

Question 2. Prepare journal entries to record:

a. The cost of the machinery purchased.

b. Any additional costs not included in the cost.

c. Depreciation expense for machinery for the year ended 30 June 2020.

Question 3. Prepare an extract of the Statement of Financial Position showing how the machinery would be professionally disclosed as at 30 June 2020.

Reference no: EM132533060

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