Entity A sold computer accessories. The draft accounts for the year ended 31 December 2014 included a motor van with the cost of $1,985,000 which was bought on 1 January 2012. Its economic life is assumed to be 8 years. However, the market has turned down on 31 December 2014, as a result, the motor van was estimated that it could only be able to generate $210,000 cash at each year-end of 2015, 2016, 2017, 2018 and 2019 respectively. It will then be scrapped on 31 December 2019 with a scrap value of $25,000. Alternatively, the motor van could be sold immediately on 31 December 2014 for $840,000 and $95,000 selling costs incurred. Market interest rates are 12.00% per annum. Recoverable amounts on 31 December 2015 and 31 December 2016 are $750,000 and $850,000 respectively. On 1 January 2016, Entity A changed the depreciation method from the straight-line method to the reducing balance method of 20% annually. On 31 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 on 31 December 2014, 31 December 2015, 31 December 2016 and 31 December 2017.
Entity A sold computer accessories. The draft accounts for the year ended 31 December 2014 included a motor van with the cost of $1,985,000 which was bought on 1 January 2012. Its economic life is assumed to be 8 years.
However, the market has turned down on 31 December 2014, as a result, the motor van was estimated that it could only be able to generate $210,000 cash at each year-end of 2015, 2016, 2017, 2018 and 2019 respectively. It will then be scrapped on 31 December 2019 with a scrap value of $25,000.
Alternatively, the motor van could be sold immediately on 31 December 2014 for $840,000 and $95,000 selling costs incurred. Market interest rates are 12.00% per annum.
Recoverable amounts on 31 December 2015 and 31 December 2016 are $750,000 and $850,000 respectively.
On 1 January 2016, Entity A changed the
On 31 December 2017, Entity A sold the motor van for $580,500.
REQUIRED:
According to the relevant accounting standards, provide all necessary
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