Chapter 12, Problem 12.10E

Assets Held for Disposal. Hattie Corporation recently decided to dispose of a significant portion of its plant assets The assets to be held for disposal are summarized here:

Description	Machinery*	Equipment* *
Cost	$696,000	$1,550,000
Accumulated depreciation	(348,000)	(620,000)
Net book value at year end	$348,000	$ 930,000

*Machinery is depreciated by the straight-line method, assuming a 6-year life with no scrap value. The asset was acquired 3 years ago

**Equipment is deprecated by the straight-line method, assuming a 10-year life with no scrap value.

The asset was acquired 4 years ago

At the time the decision was made to dispose of the assets, the book values of the assets approximated their fair values Assume that costs to sell the assets are zero When the assets were held for disposal, the following changes in fair value occurred.

Subsequent Year	Machinery	Equipment
End of Year 1 fair value	$200,000	$900,000
End of Year 2 fair value	$215,000	950,000

Prepare any journal entries necessary to account for the changes in fair value for Years 1 and 2.