a. Record depreciation
Depreciation for each year = $176400 / 7 = $25,200
Since the machinery is used only for 6 months till June 2021. The depreciation to be charged should be for 6 months.
Depreciation for 2021 = $25200 * (6/12) = $12,600
Accumulated Depreciation = $25200 * 4.5 years = $113,400
Gain on sale of machinery = $75600 - ( $176400 - $113400) = $12,600
Loss due to fire = $60480 - ( $176400 - $113400) = $2520
No. | Date | Accounts | Debit | Credit |
a. | July 01, 2021 | Depreciation expenses | 12,600 | |
Machinery | 12,600 | |||
(Being depreciation expense for half year) | ||||
b. | July 01, 2021 | Cash | 75600 | |
Accumulated Depreciation | 113400 | |||
Gain on sale of Machinery | 12600 | |||
Machinery | 176400 | |||
(Being sale of machinery) | ||||
c. | July 01, 2021 | Cash | 60480 | |
Accumulated Depreciation | 113400 | |||
Loss due to fire | 2520 | |||
Machinery | 176400 | |||
(Being loss due to fire) |
Exercise 8-17 Partial-year depreciation; disposal of plant asset LO P2 Rayya Co. purchases and installs a...
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