PA9-2 (Algo) Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5] Ly Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: Accumulated Depreciation Asset Machine A Machine B Original Residual Cost Value $34,000 $3,700 Estimated Life 5 years 66,200 4,600 (straight-line) $24,240 (4 years) 14 years The machines were disposed of in the following ways: Machine A: Sold on January 1 for $10,200 cash. Machine B: On January 1, this machine was scrapped with 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.) 1- Record the current year depreciation for Machine A prior to disposal. 2- Machine A: Sold on January 1 for $10,200 cash. Record the transaction. 3- Record the current year depreciation for Machine B prior to disposal. 4- Machine B: On January 1, this machine was scrapped with zero proceeds (and zero cost of removal). Record the transaction. $48,400 (11 years)
PA9-2 (Algo) Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5] Ly Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: Accumulated Depreciation Asset Machine A Machine B Original Residual Cost Value $34,000 $3,700 Estimated Life 5 years 66,200 4,600 (straight-line) $24,240 (4 years) 14 years The machines were disposed of in the following ways: Machine A: Sold on January 1 for $10,200 cash. Machine B: On January 1, this machine was scrapped with 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.) 1- Record the current year depreciation for Machine A prior to disposal. 2- Machine A: Sold on January 1 for $10,200 cash. Record the transaction. 3- Record the current year depreciation for Machine B prior to disposal. 4- Machine B: On January 1, this machine was scrapped with zero proceeds (and zero cost of removal). Record the transaction. $48,400 (11 years)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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![PA9-2 (Algo) Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5]
Ly Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following:
Accumulated Depreciation
Asset
Machine
A
Machine
B
Original Residual
Cost
Value
$34,000
$3,700
66,200
Estimated
Life
5 years
4,600
(straight-line)
$24,240
14 years
The machines were disposed of in the following ways:
Machine A: Sold on January 1 for $10,200 cash.
Machine B: On January 1, this machine was scrapped with 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.)
(4
years)
$48,400
(11
years)
1- Record the current year depreciation for Machine A prior to disposal.
2- Machine A: Sold on January 1 for $10,200 cash. Record the transaction.
3- Record the current year depreciation for Machine B prior to disposal.
4- Machine B: On January 1, this machine was scrapped with zero proceeds (and zero cost of removal). Record the
transaction.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6ecab9d7-8de3-4dd9-b395-d6e1f9355ad0%2Fc78fff01-a393-4bd0-ab82-965832882709%2Fmydlij_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PA9-2 (Algo) Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5]
Ly Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following:
Accumulated Depreciation
Asset
Machine
A
Machine
B
Original Residual
Cost
Value
$34,000
$3,700
66,200
Estimated
Life
5 years
4,600
(straight-line)
$24,240
14 years
The machines were disposed of in the following ways:
Machine A: Sold on January 1 for $10,200 cash.
Machine B: On January 1, this machine was scrapped with 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.)
(4
years)
$48,400
(11
years)
1- Record the current year depreciation for Machine A prior to disposal.
2- Machine A: Sold on January 1 for $10,200 cash. Record the transaction.
3- Record the current year depreciation for Machine B prior to disposal.
4- Machine B: On January 1, this machine was scrapped with zero proceeds (and zero cost of removal). Record the
transaction.
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