Milk Company bought a machine on 1 January 2015 for $5,000,000. The machine has an estimated useful life of 10 years with no residual value. The company uses straight-line depreciation method, cost model for all its PPE and its balance day is 31 December.
At December 31, 2016, the performance of the asset was not as expected, producing less milk than the original amount predicted. After some calculations, it was estimated that the fair value less cost to sell the machine would be $3,900,000 and the value in use of the machine would be $3,700,000.
At December 31, 2017, the fair value less cost to sell the machine is $3,350,000 and the present value of expected future cash flow on the machine is $3,412,500. The recoverable amount of the machine at December 31, 2018, is estimated to be $2,975,000.
On 30 September 2019, Milk Company decided to donate the machine to the Dunedin City Council for future fundraising. The fair value of the machine was estimated to be $2,800,000 at the time of the donation.
Required
Prepare the necessary journal entries to record the above transactions.