Penaga Indah has a machine with a cost of RM700,000. This machine is used in the...

 

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Penaga Indah has a machine with a cost of RM700,000. This machine is used in the company's operation and is expected to be used only for the next three years. The company estimates the present value of net cash flow from the machine is about RM300,000, and the fair value less cost to sell is RM280,000. The accumulated depreciation of the machine until September 30, 2023, amounted to RM200,000. Required: a) Explain the suitable accounting treatment for the given situation. The answer must be supported with appropriate journal entries (if any) and an explanation of its effect on the Statement of Financial Position and Statements of Profit or Loss and Other Comprehensive Income for the current year. b) On November 15, 2023, the company sold the machine. Prepare the journal entry to record the disposal of the machine, assuming that the company received cash RM290,000 from the sale of the machine. Assumes that the company charged a full-year depreciation in the year an asset was acquired and no depreciation in the year the asset was sold. Penaga Indah has a machine with a cost of RM700,000. This machine is used in the company's operation and is expected to be used only for the next three years. The company estimates the present value of net cash flow from the machine is about RM300,000, and the fair value less cost to sell is RM280,000. The accumulated depreciation of the machine until September 30, 2023, amounted to RM200,000. Required: a) Explain the suitable accounting treatment for the given situation. The answer must be supported with appropriate journal entries (if any) and an explanation of its effect on the Statement of Financial Position and Statements of Profit or Loss and Other Comprehensive Income for the current year. b) On November 15, 2023, the company sold the machine. Prepare the journal entry to record the disposal of the machine, assuming that the company received cash RM290,000 from the sale of the machine. Assumes that the company charged a full-year depreciation in the year an asset was acquired and no depreciation in the year the asset was sold.

Answer rating: 100% (QA)

a Suitable Accounting Treatment Impairment Loss Based on the information provided Penaga Indah needs to assess the machine for impairment Impairment o... View the full answer