Lion Ltd purchased equipment on 1 January 2016 at a cost of $180 000. It had an estimated useful life of 8 years and an estimated residual value of $20 000. Each year $1000 is spent on the maintenance of the equipment. On 1 July 2018, Lion paid $8800 cash for a major overhaul of the equipment after which it had an expected useful life of 5 more years and nil residual value. The entity’s reporting period ends on 30 June and it uses straight-line depreciation.

Required

(a) Calculate the depreciation expense for 2016 and 2017.

(b) Prepare the journal entry for the $8800 paid for the overhaul of the equipment, assuming:

(i) No GST

(ii) GST of 10%.

(c) Calculate the depreciation expense for 2019 based on assumption (i) in (b) above.