On 1 July 2017, Entity A purchased a chemical machine from Entity B on credit. The purchase price was $4,560,000 and it will be fully settled on 1 August 2017. A legal and professional fee of $35,500 was paid by a cheque to Entity C in order to ensure the machine can be ready for use on 1 July 2017. The economic life of the machine is 5 years without any residual value. According to the purchase contract, Entity A is required to remove the plant on 30 June 2022 and Entity A estimated the dismantling costs of the plant will be $55,123 on that day. Entity A considered that a discount rate of 10.50% is appropriate for the calculation of present value. On 30 June 2022, the actual dismantling costs were only $45,600 and they were paid by a direct bank transfer to Entity D. On 1 July 2022, a recycling company, Entity E, purchased all the machine scraps for $32,500 on credit and agreed to pay in full on 16 July 2022. REQUIRED: According to relevant accounting standards, prepare journal entries to record the transactions of Entity A from 1 July 2017 and 16 July 2022. ACCOUNTS FOR INPUT: | Machine | Land | Building | Bank | Payable | Receivable | Retained earnings | Share capital | No entry | | Other income | Other expense | Interest expense | Interest revenue | Depreciation | Accum. depreciation | | Restoration liability | Loss on disposal | Gain on disposal | Revaluation surplus | Revaluation deficit |
On 1 July 2017, Entity A purchased a chemical machine from Entity B on credit. The purchase price was $4,560,000 and it will be fully settled on 1 August 2017. A legal and professional fee of $35,500 was paid by a cheque to Entity C in order to ensure the machine can be ready for use on 1 July 2017. The economic life of the machine is 5 years without any residual value.
According to the purchase contract, Entity A is required to remove the plant on 30 June 2022 and Entity A estimated the dismantling costs of the plant will be $55,123 on that day. Entity A considered that a discount rate of 10.50% is appropriate for the calculation of present value.
On 30 June 2022, the actual dismantling costs were only $45,600 and they were paid by a direct bank transfer to Entity D.
On 1 July 2022, a recycling company, Entity E, purchased all the machine scraps for $32,500 on credit and agreed to pay in full on 16 July 2022.
REQUIRED:
According to relevant accounting standards, prepare journal entries to record the transactions of Entity A from 1 July 2017 and 16 July 2022.
ACCOUNTS FOR INPUT:
| Machine | Land | Building | Bank | Payable | Receivable |
| Other income | Other expense | Interest expense | Interest revenue |
| Restoration liability | Loss on disposal | Gain on disposal | Revaluation surplus | Revaluation deficit |
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