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Question - Black Ltd acquires an item of machinery on 1 July 2016 for a total acquisition cost of $51 000. The life of the asset is assessed as being six years, after which time Black Ltd expects to be able to dispose of the asset for $5000. It is expected that the benefits will be generated in a pattern that is best reflected by the sum-of-digits depreciation approach. On 1 July 2019, owing to unforeseen circumstances, the machinery is exchanged for a motor vehicle. The motor vehicle is two years old, originally cost $15 000 and has a fair value of $1 0000.
Required - Provide the necessary journal entry for the disposal of the machinery and the a acquisition of the motor vehicle on 1 July 2019.
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