Pacifica Manufacturing retired a computerized metal stamping machine on December 31, 2019.Pacifica sold the machine to another company and did not replace it. The following data areavailable for the machine:Cost (installed), 1/1/2014 $880,000Residual value estimated on 1/1/2014 60,000Estimated life as of 1/1/2014 10 yearsThe machine was sold for $225,000 cash. Pacifica uses the straight-line method of depreciation.Required:1. Prepare the journal entry to record depreciation expense for 2019.2. Compute accumulated depreciation at December 31, 2019.3. Prepare the journal entry to record the sale of the machine.4. CONCEPTUAL CONNECTION Explain how the disposal of the fixed asset would affectthe 2019 financial statements. Ignore income taxes.

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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.