The journal entry to record the machinery as held for sale would require a credit to Machinery of P10,000,000.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
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TRUE OR FALSE?

Avocado Inc. acquire a machinery at a cost of P10,000,000 on January 1, 2021 to be used in the business. It has an estimated life of 5 years and a residual value of P1,000,000. On January 1, 2024, the management of Avocado Inc decided to classify the said machinery as held for sale. The fair value less cost of disposal was estimated at P3,800,000. On July 1, 2024, the machinery was sold for P3,000,000.

The journal entry to record the machinery as held for sale would require a credit to Machinery of P10,000,000.

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