Cobalt Ltd Owns an Item of Machinery That Has a Cost

question 8

Multiple Choice

Cobalt Ltd owns an item of machinery that has a cost of $700 000 and accumulated depreciation of $200 000 as at 1 July 2013.On that date the machine is sold to Blue Ltd for $533 493,and then leased back over 8 years (the remaining life of the machine) .The lease is non-cancellable.The lease payments are $100 000 per annum,payable in arrears on 30 June each year.The interest rate implicit in the lease is 10% and the economic benefits of the asset are expected to be realised evenly over its life.What are the entries to record the transactions in Blue's books on 1 July 2013 and 30 June 2014 (rounded to the nearest dollar) ?

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Definitions:

Decay Theory of Forgetting

A psychological theory suggesting that memory fades over time due to the mere passage of time unless it is actively recalled or rehearsed.

Repression Theory

A psychological concept suggesting that individuals unconsciously push disturbing thoughts, desires, and memories out of conscious awareness.

Interference Theory

A theory suggesting that the ability to remember information is affected by competing information, either before or after the learning process.

Proactive Interference

The difficulty in learning new information because of the interference from existing, previously learned information.