Part A – Reporting non-current asset transactions, exchange and disposal (3 marks)
Westway Freight provides local freight service in Ballarat. The firm’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.
Required
Record the transactions in Westway Freight’s journal.
