GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
17th Edition
ISBN: 9781260218831
Author: Libby
Publisher: MCG CUSTOM
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Chapter 8, Problem 8.6P
Recording and Interpreting the Disposal of Three Long-Lived Assets (AP8-5)
LO8-3 8-5 During the current year, Merkley Company disposed of three different assets. On January 1 of the current year, prior to the disposal of the assets, the accounts reflected the following:
| Asset | Original Cost | Residual Value | Estimated Life | ||
| Machine A | $21,000 | $3,000 | 8 years | $15,750 (7 years) | |
| Machine B | 50,000 | 4,000 | 10 years | 36,800 (8 years) | |
| Machine C | 85,000 | 5,000 | 15 years | 64,000 (12 years) | |
The machines were disposed of during the current year in the following ways:
- a. Machine A: Sold on January 1 for $5,000 cash.
- b. Machine B: Sold on December 31 for $10,500; received cash, $2,500, and an $8,000 interest-bearing (12 percent) note receivable due at the end of 12 months.
- c. Machine C: On January 1, this machine suffered irreparable damage from an accident. On January 10, a salvage company removed the machine at no cost.
Required:
- 1. Give all
journal entries related to the disposal of each machine in the current year. - 2. Explain the accounting rationale for the way that you recorded each disposal.
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Required information
(The following information applies to the questions displayed below.]
During the current year, Merkley Company disposed of three different assets. On January 1 of the current year, prior to the
disposal of the assets, the accounts reflected the following:
Accumulated
Original
Residual
Estimated
Life
8 years
8 years
Depreciation
(straight line)
$20,250 (6 years)
33,750 (6 years)
48,918 (12 years)
Asset
Cost
Value
Machine A
$ 30,000
$ 3,000
Machine B
49,000
4,000
Machine C
75,500
6,200
17 years
The machines were disposed of during the current year in the following ways:
a. Machine A: Sold on January 1 for $9,450 cash.
b. Machine B: Sold on December 31 for $10,325; received cash, $2,500, and a $7,825 interest-bearing (12 percent) note
receivable due at the end of 12 months.
c. Machine C: On January 1, this machine suffered irreparable damage from an accident. On January 10, a salvage
company removed the machine at no cost.
Required:
1. Give all journal entries related…
During the current year, Yost Company disposed of three different assets. On January 1 of the current year, prior to the
disposal of the assets, the accounts reflected the following:
Accumulated Depreciation
Asset
Machine A
Machine B
Original Cost Residual Value
Estimated Life
$33,000
$3,000
12 years
16,800
10 years
Machine C
5,100
17 years
140,000
75,600
(straight line)
The machines were disposed of during the current year in the following ways:
a. Machine A: Sold on January 1 for $7,500 cash.
$25,000 (10 years)
98,560 (8 years)
49,765 (12 years)
b. Machine B: Sold on December 31 for $54,120; received cash, $43,296, and an $10,824 interest-bearing (12 percent)
note receivable due at the end of 12 months.
c. Machine C: On January 1, this machine suffered irreparable damage from an accident. On January 10, a salvage
company removed the machine at no cost.
P8-5 Part 1
Required:
1. Give all journal entries related to the disposal of each machine in the current year.
a. Machine A.
b.…
Chapter 8 Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
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