Question

Required information Problem 10-6A Disposal of plant assets LO C1, P1, P2 (The following information applies to the questions displayed below.] Onslow Co. purchased a used machine for $178,000 cash on January 2. On January 3, Onslow paid $2,840 to wire electricity to the machine and an additional $1,160 to secure it in place. The machine will be used for six years and have a $14,000 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of. Problem 10-6A Part 1

Answer 1

Date	Account titles and explantion	Debit	Credit
02-Jan	Machinery A/c (equipment)	$178,000
	Cash		$178,000
	(Being machinery purchased for cash)
03-Jan	Machinery A/c (equipment)	$2,840
	Cash		$2,840
	(Being additional expenses incurred to bring machinery in workable condition capitalised)
03-Jan	Machinery A/c (equipment)	$1,160
	Cash		$1,160
	(Being additional expenses incurred to bring machinery in workable condition capitalised)
	Total value of machinery =	$182,000
	Salvage value	$14,000
	Useful life	6 Years
	Depreciation per annum	(182,000-14,000)/6
		$28,000