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PSB8.5 Prepare journal entries for asset impairments and reversals. LO6 On 1 July 2018, Fox...

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PSB8.5 Prepare journal entries for asset impairments and reversals. LO6 On 1 July 2018, Fox Ltd purchased equipment for $85 000 to manufacture a new product for sale overseas. The estimated useful life was 8 years, with a residual value of $5000. Fox Ltd uses straight-line depreciation. On 30 June 2019 there was an indication that the machine could be impaired due to fluctuations in the exchange rate, and Fox Ltd calculated the recoverable amount of the machine. The net selling price was $61 000 and the value in use was estimated to be $45 000. Twelve months later this threat no longer existed and the recoverable amount was reassessed. The net selling price was $70 000 and the value in use was estimated to be $65 000. Assume that the estimated residual value was $5000 throughout Required a. Prepare the journal entry to record the purchase of the machine and the depreciation for the year ended 30 June 2019. b. Prepare the journal entry to record any asset impairment at 30 June 2019. c. Prepare the journal entry to record depreciation for the year ended 30 June 2020. d. Prepare the journal entry to record any asset impairment or reversal at 30 June 2020

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