On 1 July 2014, White Ltd paid $700,000 to acquire a machine that was to be used in the manufacture of furniture. On this date, management of White Ltd estimated that the machine had a useful life of ten years and a residual value of $100,000. In accordance with AASB 116 Property, Plant and Equipment, White Ltd uses the revaluation model as its accounting policy to measure items of property, plant and equipment and the straight-line method of depreciation.
The fair values of the machine for the first three years were as follows:
- 30 June 2015: $685,000
- 30 June 2016: $620,000
- 30 June 2017: $520,000
On 31 December 2017, White Ltd sold the machine for $500,000 cash.
Based on the requirements of AASB 116 Property, Plant and Equipment, provide (where necessary) appropriate journal entries (and supporting calculations) in relation to the:
- Measurement of the machine as at 30 June 2015,
- Measurement of the machine as at 30 June 2016,
- Measurement of the machine as at 30 June 2017, and
- Sale of the machine on 31 December 2017.
Note that for any year/s that a revaluation journal entry is not required, you should explain this and provide a supporting calculation.
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