Ly Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: Asset Original Residual Estimated Accumulated Cost Value Life Depreciation (straight-line) Machine A $33,000 $3,600 4years $22,050 (3 years) Machine B 65,200 4,300 14years 47,850 (11 years) The machines were disposed of in the following ways: Machine A: Sold on January 1 for $11,700 cash. Machine B: On January 1, this machine was sold to a salvage company at zero proceeds (and zero cost of removal). Required: 1. & 2. Prepare the journal entries related to the disposal of Machine A and B at the beginning of the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Record the current year depreciation for Machine A prior to disposal. (Note: Enter debits before credits.) Date General Journal Debit Credit January 01 [ ] [ ] [ ] Machine A: Sold on January 1 for $11,700 cash. Record the transaction. (Note: Enter debits before credits.) Date General Journal Debit Credit January 01 [ ] [ ] [ ] Record the current year depreciation for Machine B prior to disposal. (Note: Enter debits before credits.) Date General Journal Debit Credit January 01 [ ] [ ] [ ] Machine B: On January 1, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost. Record the transaction. (Note: Enter debits before credits.) Date General Journal Debit Credit January 01 [ ] [ ] [ ]
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Ly Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following:
Asset Original Residual Estimated Accumulated
Cost Value Life
Machine A $33,000 $3,600 4years $22,050 (3 years)
Machine B 65,200 4,300 14years 47,850 (11 years)
The machines were disposed of in the following ways:
- Machine A: Sold on January 1 for $11,700 cash.
- Machine B: On January 1, this machine was sold to a salvage company at zero proceeds (and zero cost of removal).
Required:
1. & 2. Prepare the journal entries related to the disposal of Machine A and B at the beginning of the current year. (If no entry is required for a transaction/event, select "No
- Record the current year depreciation for Machine A prior to disposal. (Note: Enter debits before credits.)
Date General Journal Debit Credit
January 01 [ ] [ ] [ ]
- Machine A: Sold on January 1 for $11,700 cash. Record the transaction. (Note: Enter debits before credits.)
Date General Journal Debit Credit
January 01 [ ] [ ] [ ]
- Record the current year depreciation for Machine B prior to disposal. (Note: Enter debits before credits.)
Date General Journal Debit Credit
January 01 [ ] [ ] [ ]
- Machine B: On January 1, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost. Record the transaction. (Note: Enter debits before credits.)
Date General Journal Debit Credit
January 01 [ ] [ ] [ ]
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