Question

O’Callaghan Incorporated (OI) is in the highway construction business. OI’s property, plant, and equipment account includes heavy construction equipment. The following transactions relate to the disposal of two of their pieces of equipment.
• Equipment One— OI decided to dispose of one of its pieces of heavy machinery and replace it with a newer, more enceinte model. OI received $ 125,000 cash on the sale of the machine. At the date of the sale, the machine had a net book value of $ 60,000. The original cost of the equipment was $ 500,000.
• Equipment Two— OI recognizes the scoop separate from the rest of the equipment, since it is a significant part that needs replacing. The scoop was replaced this year at a cost of $ 200,000. The scoop was depreciated separately. The net book value of the scoop at the date of replacement was $ 25,000.

Required:
Provide the journal entry for the two pieces of equipment.



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  • CreatedFebruary 17, 2015
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