Entity A leases construction machinery to local building sub-contractors for many years. On 1 January 2014, Entity A purchased 20 units of construction road roller. The economic life of the road roller is 5 years. The invoice price was $1,800,000 per unit. They were all delivered to Entity A on 1 April 2014. Installation expense of $50,000 was incurred for installing 20 units of road roller on 1 April 2014. The invoice price and the installation expense were settled on 5 May 2014 and 1 April 2014 respectively. The depreciation policy for the construction road roller is based on the straight-line method with a residual value of $1,500 each. On 31 March 2016, the construction market has suddenly turned down due to several new government legislation on the construction industry. Therefore, Entity A estimated that each construction road roller would be able to generate $400,000 cash per annum in the remaining years and the scrap value of these 20 units of construction road roller was totally $30,000. The discounting rate was applied as 15.00% per annum. Entity A also estimated that if they were sold to the second-hand market, the value of each construction road roller was $990,000. A disposal cost of $120,000 would be incurred for selling them. On 31 March 2017, Entity A confirmed that further impairment adjustments were not needed after the impairment review. On 31 March 2018, the construction market dramatically turned up due to the recent economic boom. Entity A estimated the value in use of a road roller would be $370,000. However, these road rollers could not be sold at that time due to a lack of a buyer. On 31 March 2019, the scrap value of the road roller was sold as $1,250 each. REQUIRED: According to relevant accounting standards, provide all necessary journal entries of Entity A from 1 January 2014 to 31 March 2019.
Entity A leases construction machinery to local building sub-contractors for many years.
On 1 January 2014, Entity A purchased 20 units of construction road roller. The economic life of the road roller is 5 years. The invoice price was $1,800,000 per unit. They were all delivered to Entity A on 1 April 2014. Installation expense of $50,000 was incurred for installing 20 units of road roller on 1 April 2014. The invoice price and the installation expense were settled on 5 May 2014 and 1 April 2014 respectively. The
On 31 March 2016, the construction market has suddenly turned down due to several new government legislation on the construction industry. Therefore, Entity A estimated that each construction road roller would be able to generate $400,000 cash per annum in the remaining years and the scrap value of these 20 units of construction road roller was totally $30,000. The discounting rate was applied as 15.00% per annum. Entity A also estimated that if they were sold to the second-hand market, the value of each construction road roller was $990,000. A disposal cost of $120,000 would be incurred for selling them.
On 31 March 2017, Entity A confirmed that further impairment adjustments were not needed after the impairment review.
On 31 March 2018, the construction market dramatically turned up due to the recent economic boom. Entity A estimated the value in use of a road roller would be $370,000. However, these road rollers could not be sold at that time due to a lack of a buyer.
On 31 March 2019, the scrap value of the road roller was sold as $1,250 each.
REQUIRED:
According to relevant accounting standards, provide all necessary
ACCOUNTS FOR INPUT:
| Road roller | Plant | Machine | Motor van | Land | Building | Inventory | Intangible assets | Bank |
| Payable | Receivable |
| Depreciation | Accum. depreciation | Impairment loss | Reversal of impairment loss | Loss on disposal | Gain on disposal |
| Restoration liability |
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