Reference no: EM133072495
Question - Q1. On 2 January 2020 Wilton Press purchased a second-hand printing press for $68,200 (GST inclusive) paying $10,000 cash and obtaining a loan for the balance of the machine. Wilton Press uses the straight-line depreciation method. The estimated useful life of the machine is 4 years with a residual value of $4,000. Wilton Press is registered for GST.
On 30 June 2020 the machine's major operating parts were overhauled at a cost of $19,800 (GST inclusive) after which the printing press is expected to have a useful life of 6 years. There was no change to the residual value of the printing press. The carrying value of the parts replaced was $8,000. All expenses were paid in cash.
Prepare general journal entries to record:
-Purchase of the printing press on 2 January 2020.
-Depreciation expense for the year ending 30 June 2020.
-Overhaul of the printing press on 30 June 2020.Narrations are not required. Show your calculations
Determine the depreciation expense of the printing press for the year ending 30 June 2021. Show your calculations.
Q2. On 2 July 2020 Sam Olsen Transport purchased a new delivery vehicle costing $95,000 (GST exclusive). The delivery is depreciated using the diminishing value depreciation method at 20% per year.
On 30 June 2021 the delivery vehicle was considered unsuitable. The machine and cash of $30,000 was exchanged for a replacement delivery vehicle costing $120,000 (GST exclusive). Sam Olsen Transport is registered for GST.
Prepare the general journal entries to record the disposal of the delivery vehicle and the acquisition of the replacement delivery vehicle.
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