Question

1. 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 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% 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. 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 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.

   ACCOUNT NAMES FOR INPUT:

   | Road roller | Plant | Machine | Motor van | Land | Building | Inventory | Intangible assets | Bank |

   | Payable | Receivable | Retained earnings | Other income | Other expense | Interest expense | Interest revenue |

   | Depreciation | Accum. depreciation | Impairment loss | Reversal of impairment loss | Loss on disposal | Gain on disposal |

   | Restoration liability | Goodwill | Revaluation surplus | Revaluation deficit | No entry |

   ANSWERS:

   Journal Entries:

   Date	Account Name	Debit ($)	Credit ($)	Hints For Sequence
   1-Jan-14	Blank 1	Blank 2
   	Blank 3		Blank 4
   1-Apr-14	Blank 5	Blank 6
   	Blank 7	Blank 8		Judge Dr/Cr side.
   	Blank 9	Blank 10		Judge Dr/Cr side.
   5-May-14	Blank 11	Blank 12
   	Blank 13	Blank 14		Judge Dr/Cr side.
   	Blank 15	Blank 16		Judge Dr/Cr side.
   31-Mar-15	Blank 17	Blank 18
   	Blank 19		Blank 20
   31-Mar-16	Blank 21	Blank 22
   	Blank 23	Blank 24		Judge Dr/Cr side.
   	Blank 25	Blank 26		Judge Dr/Cr side.
   	Blank 27	Blank 28		Judge Dr/Cr side.
   	Blank 29	Blank 30		Judge Dr/Cr side.
   	Blank 31	Blank 32		Judge Dr/Cr side.
   31-Mar-17	Blank 33	Blank 34
   	Blank 35		Blank 36
   31-Mar-18	Blank 37	Blank 38
   	Blank 39	Blank 40		Judge Dr/Cr side.
   	Blank 41	Blank 42		Judge Dr/Cr side.
   	Blank 43	Blank 44		Judge Dr/Cr side.
   	Blank 45	Blank 46		Judge Dr/Cr side.
   	Blank 47	Blank 48		Judge Dr/Cr side.
   31-Mar-19	Blank 49	Blank 50
   	Blank 51	Blank 52		Judge Dr/Cr side.
   	Blank 53	Blank 54		Judge Dr/Cr side.
   	Blank 55	Blank 56		Judge Dr/Cr side.
   	Blank 57	Blank 58		Judge Dr/Cr side.
   	Blank 59	Blank 60		P/L Item, Judge Dr/Cr side.
   	Blank 61	Blank 62		Judge Dr/Cr side.

Answer 1