Entity A sold computer accessories.The draft accounts for the year ended31 December 2014included a motor van with the cost of$1,985,000which was bought on1 January 2012.Its economic life is assumed to be8 years.

However, the market has turned down on31 December 2014, as a result, the motor van was estimated that it could only be able to generate$210,000cash at each year-end of2015, 2016, 2017, 2018 and 2019respectively.It will then be scrapped on31 December 2019with a scrap value of$25,000.

Alternatively, the motor van could be sold immediately on31 December 2014for$840,000and$95,000selling costs incurred.Market interest rates are12.00% per annum.

Recoverable amounts on31 December 2015 and 31 December 2016are$750,000 and $850,000respectively.

On1 January 2016, Entity A changed the depreciation method from the straight-line method to the reducing balance method of20%annually.

On31 December 2017, Entity A sold the motor van for$580,500.

REQUIRED:

According to the relevant accounting standards, provide all necessary journal entries of Entity A on31 December 2014, 31 December 2015, 31 December 2016and31 December 2017.

ACCOUNTS FOR INPUT:

| Road roller | Plant | Machine | Motor van | Land | Building | Inventory |Intangible assets|Bank |

| Payable | Receivable| Retained earnings|Other income |Other expense |Interest expense | Interest revenue |

|Depreciation |Accum. depreciation |Impairment loss |Reversal of impairment loss |Loss on disposal |Gain on disposal |

|Restoration liability |Goodwill |Revaluation surplus | Revaluation deficit | No entry |

ANSWERS:

Journal Entries: