Question
Milk Company bought a machine on January for $ cash. The machine has an estimated
useful life of years with no residual value. The company uses straightline depreciation method, cost
model for all its PPE and its balance day is December.
At December the performance of the asset was not as expected, producing less milk than the
original amount predicted. After some calculations, it was estimated that the fair value less cost to sell the
machine would be $ and the value in use of the machine would be $
At December the fair value less cost to sell the machine is $ and the present value of
expected future cash flow on the machine is $ The recoverable amount of the machine at
December is estimated to be $
On September Milk Company decided to donate the machine to the Dunedin City Council for
future fundraising. The fair value of the machine was estimated to be $ at the time of the donation.
Required
Prepare the necessary journal entries to record the above transactions.
