Edwards Ltd purchases a new machine on 1 July 2020 for $70,000 cash. Residual value and...

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Edwards Ltd purchases a new machine on 1 July 2020 for $70,000 cash. Residual value and useful life were estimated to be $10,000 and 6 years, respectively. Edwards Ltd adopts the cost model for the machine and uses the straight-line method for depreciation. On 30 June 2021, the value in use of the asset was estimated to be $55,000. The asset's fair value less cost to sell on this date is $56,000. 3 Marks (a) Briefly explain about the cost model in relation to the subsequent measurement of non-current asset. In your answer, include a discussion on carrying amount and recoverable amount. (3 marks) (b) Prepare the necessary general journal entries to record the transactions for the financial year ending 30 June 2021 (i.e., from 1 July 2020 to 30 June 2021). Narrations are NOT required. (12 marks) Edwards Ltd purchases a new machine on 1 July 2020 for $70,000 cash. Residual value and useful life were estimated to be $10,000 and 6 years, respectively. Edwards Ltd adopts the cost model for the machine and uses the straight-line method for depreciation. On 30 June 2021, the value in use of the asset was estimated to be $55,000. The asset's fair value less cost to sell on this date is $56,000. 3 Marks (a) Briefly explain about the cost model in relation to the subsequent measurement of non-current asset. In your answer, include a discussion on carrying amount and recoverable amount. (3 marks) (b) Prepare the necessary general journal entries to record the transactions for the financial year ending 30 June 2021 (i.e., from 1 July 2020 to 30 June 2021). Narrations are NOT required. (12 marks)

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SOLUTION a The cost model is an accounting policy used for the subsequent measurement of noncurrent ... View the full answer