Cars and Trucks Ltd Owns an Engine Testing Machine Which

question 45

Multiple Choice

Cars and Trucks Ltd owns an engine testing machine which was purchased for $120 000.After 3 years of use the machine had accumulated depreciation of $58 560 but was revalued to $80 000.Two years later the machine was sold for $60 000 and had accumulated depreciation at the time of sale of $36 800.What journal entries would be required to record the sale of the machine in accordance with AASB 116 requirements?

• A)
• \[\begin{array} { | l | l | r | r | }
• \hline \mathrm { Dr } & \text { Cash at bank } & 60000 & \\
• \hline \mathrm { Cr } & \text { Proceeds from testing machine sold } & & 60000 \\
• \hline & & & \\
• \hline \mathrm { Dr } & \text { Accumulated depreciation } & 95360 & \\
• \hline \mathrm { Dr } & \text { Carrying amount of testing machine sold } & 24640 & \\
• \hline \mathrm { Cr } & \text { Testing machine } & & 120000 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l | l | r | r | }
• \hline \mathrm { Dr } & \text { Cash at bank } & 60000 & \\
• \hline \mathrm { Cr } & \text { Profit on sale of land } & & 35360 \\
• \hline \mathrm { Cr } & \text { Testing machine } & & 24640 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | l | r | r | }
• \hline \mathrm { Dr } & \text { Cash at bank } & 60000 & \\
• \hline \mathrm { Cr } & \text { Proceeds from sale of land } & & 60000 \\
• \hline & & & \\
• \hline \mathrm { Dr } & \text { Carrying amount of land sold } & 43200 & \\
• \hline \mathrm { Dr } & \text { Accumulated depreciation } & 36800 & \\
• \hline \mathrm { Cr } & \text { Testing machine } & & 80000 \\
• \hline
• \end{array}\]
• D)
• \[\begin{array} { | l | l | r | r | }
• \hline \mathrm { Dr } & \text { Cash at bank } & 60000 & \\
• \hline \mathrm { Dr } & \text { Accumulated depreciation } & 36800 & \\
• \hline \mathrm { Cr } & \text { Profit from sale of testing machine } & & 16800 \\
• \hline \mathrm { Cr } & \text { Testing machine } & & 80000 \\
• \hline
• \end{array}\]

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Definitions:

Short To Ground

An electrical fault where a positive wire contacts the chassis or ground of a vehicle, leading to circuit failure or potential harm.

High-Voltage Components

Parts of a system that operate at voltages higher than normal, found in electric vehicles and other specialized equipment, requiring specific safety and handling procedures.

Warning Stickers

Adhesive labels designed to alert or inform individuals about potential hazards or necessary precautions.

Current Flow

The movement of electric charge carriers, such as electrons, through a conductor or circuit.