Question

-60 CHAPTER IFRS Concepts and Application IFRSRI Brily describes the Problem 2 (Entries for Disposition of Assets): On December 31, 2017, Travis Tritt Ine has machine with a book value of $90, accumulated depreciation at this date are as follows. ok value of $940,000. The original cost and related Machine $1,300,000 Less: Accumulated depreciation 360.000 Book value $ 940,000 Depreciation is computed at $60.000 per year on a straight-line basis Instructions: Presented below is a set of ons: Presented below is a set of inderndent situation For each independent situation, indicate Journal entry to be made to record the transaction Make sure that depreciation entries are made to peace book value of the machine prior to its disposal. ( A fire completely destroys the machine on Aueust 31, 2018. An insurance settlement of $430,000 W received for this casualty. Assume the settlement was received immediately, (b) On April 1, 2018, Tritt sold the machine for $1,040,000 to Dwight Yoakam Company.

Answer 1

a)	Date	Account titles & Explanations					Debit	Credit
	31/8/2018	Depreciation expense					40000
		Accumulated depreciation						40,000
		(60000/12)*8
	31/12/2018	Cash					430,000
		Accumulated depreciation					400,000
		Loss on disposal					470,000
		Equipment						1,300,000
b)	4/1/2018	Depreciation expense					15000
		Accumulated depreciation						15,000
		(60000/12)*3
	4/1/2018	Cash					1,040,000
		Accumulated depreciation					375000
		Gain on disposal						115,000
		Equipment						1,300,000