Phonecell purchased equipment at a purchase price of $605,000 (GST Inclusive) on 30 June 2018. The equipment
Question:
Phonecell purchased equipment at a purchase price of $605,000 (GST Inclusive) on 30 June 2018. The equipment is depreciated at 20% a year using the reducing balance method of depreciation and is expected to have a residual value of $100,000.
On 30 June 2020, Phonecell paid $77,000 (GST Inclusive) to upgrade the equipment which significantly increased its residual value and paid an additional $1,430 (GST Inclusive) in regular maintenance expenses. The depreciation rate and depreciation method remained unchanged.
On 31 March 2021, due to a decreased demand for its services, Phonecell sold the equipment purchased on 30 June 2018 in cash at a loss of $30,000.
Record depreciation expense entries on 30 June 2019, 30 June 2020, 30 June 2021, equipment upgrade and maintenance on 30 June 2020 and sale of equipment on 30 June 2021 in a General Journal . GST needs to be accounted for. Narrations are not required.
