Recording and Interpreting the Disposal of Three Long-Lived Assets (P8-6)
During 2011, Rank Company disposed of three different assets. On January1, 2011, prior to their disposal, the accounts reflected the following:
Asset | Original Cost | Residual Value | Estimated Life | Accumulated Depreciation(straight line) |
Machine A | $24,000 | $2,000 | 5 years | $17,600 (4 years) |
Machine B | 16,500 | 5,000 | 10 years | 8,050(7 years) |
Machine C | 59,200 | 3,200 | 14 years | 48,000 (12 years) |
The machines were disposed of in the following ways:
a. Machine A: Sold on January 1, 2011, for $6,750 cash.
b. Machine B: Sold on December 31, 2011, for $7,000; received cash, $2,000, and a $5,000 interest- bearing (10 percent) note receivable due at the end of 12 months.
c. Machine C: On January 1, 2011, this machine suffered irreparable damage from an accident and was scrapped.
Required:
1. Give all journal entries related to the disposal of each machine.
2. Explain the accounting rationale for the way in which you recorded each disposal.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.