ABC Ltd acquired a machine for $750 000 on 1 July 2018. The machine had a...

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Accounting

ABC Ltd acquired a machine for $750 000 on 1 July 2018. Themachine had a useful life of five years and was depreciated on astraight-line basis with no disposal value. ABC Ltd adopts the costmodel for accounting for assets in this class. ABC Ltd makes thefollowing estimates of the value of the machine: Date Net sellingprice Value in use Fair Value 30 June 2019 $550 000 520 000 590 00030 June 2020 $460 000 420 000 490 000 Indicators of impairment wereidentified on 30 June 2019, while indicators of a reversal ofimpairment were found on 30 June 2020.
REQUIRED: Prepare journal entries relating to this asset from 30June 2019 to 30 June 2020. Show the steps of impairment (orreversal of impairment) tests. Show all working (step by step).

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Impairement exists when assets market value is less than carrying value on the balance sheet Case Date Particulars Debit Credit Working Notes 1 30Jun19 Impairement Loss ac 50000 WNo2 To asset 50000 Being impairement Loss 2 30Jun19 Impairement Loss ac 80000 WNo2 To asset ac 80000 Being impairement Loss 3 30Jun19 See Answer

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