Part A – Reporting non-current asset transactions, exchange and disposal (3 marks)
Westway Freight provides local freight service in Ballarat. The firmâ€™s statement of financial position includes the following assets under Property, Plant and Equipment: Land, Buildings, and Motor-carrier Equipment. Westway has a separate accumulated depreciation account for each of these assets except land. Assume that Westway Freight completed the following transactions:
Jan. 2 Traded in motor-carrier equipment with carrying amount of $47 000 (cost of $130 000) for similar new equipment with a cash cost of $176 000. Westway received a trade-in allowance of $70 000 on the old equipment and paid the remainder in cash.
July 1 Sold a building that had cost $550 000 and had accumulated depreciation of $247 500 up to 31 December of the preceding year. Depreciation is calculated on a straight-line basis. The building has a 30-year useful life and a residual value of $55 000. Westway received $100 000 cash, with the balance of $600 000 being a loan receivable.
Record the transactions in Westway Freight’s journal.