ASL Woollen Mills purchased a weaving machine on 2 July 2018 with a list price of $156,090.
Question:
ASL Woollen Mills purchased a weaving machine on 2 July 2018 with a list price of $156,090. Additional costs associated with the purchase of the machine included freight $5,610, insurance in transit $737. An additional $2,530 was paid to repair damage caused during installation of the weaving machine. ASL Woollen Mills also signed a 12-month maintenance agreement for $3,300 which was paid in cash. All costs are shown as GST inclusive.
ASL paid $60,000 cash and obtaining a 5-year loan for the balance of the acquisition cost of the weaving machine.
The effective useful life of the weaving machine is expected to be 8 years with a residual value of $15.000
ASL Woollen Mills is registered for GST and has a financial year ending 30 June.
On 30 June 2020 ASL Woollen Mills replaced a major part of the weaving machine costing $15, 400 (GST inclusive). The carrying value of the part replaced was $8,250. It is estimated that the effective life of the weaving machine will be extended by 4 years.
Required:
Prepare general journal entries to record the following (Narrations are not required):
Purchase of the printing machine on 2 February 2018.
Depreciation of the weaving machine for the year ending 30 June 2019.
Overhaul of the weaving machine on 30 June 2020
Sale of the weaving machine on 30 December 2020.
Expert Answer:
