On November 23, 2013, Radon Mines Company acquired new machinery by trading in old machinery and paying
Question:
The old machinery was acquired on March 31, 2009, for $25,000. At that time, its estimated useful life was 10 years, with a residual value of $4,000. Depreciation was correctly recorded for 2009, 2010, 2011, and 2012. On the trade-in date, the old machinery's fair market value was approximately the same as its net book value.
Required:
a. Give the journal entries that should be made in 2013 to record the depreciation and trade-in of the old asset, and the acquisition and depreciation of the new asset.
b. On June 30, 2019, the machinery acquired in 2013 was retired from service and sold for $4,000. Give the journal entries that should be made in 2019 related to this machinery.
c. Briefly explain how the answer to part "b" would differ if the residual value of the new machinery was estimated at $10,000 rather than $8,000.
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Related Book For
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
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