Question: Panych Ltd discontinued use of three assets during 20X2 a

Panych Ltd. discontinued use of three assets during 20X2:
a. A brick kiln that originally cost $ 100,000 to construct was shut down and retired from service on 30 June. It is being depreciated over 25 years on a straight- line basis. The car-rying value ( i. e., Thecar-ryingvalue(i.e., the net book value) was $ 40,000 at the beginning of 20X2. Panych has no plans to use the kiln in the future, and it is not saleable since it cannot be moved and is on Panych’s private property.
b. The company stopped using a movable concrete casting assembly on 1 April 20X2 due to lack of demand for the assembly to be moved to construction sites. Its use will be restored if and when construction demand picks up. The assembly’s original cost was $ 120,000, and it was 50% depreciated on 1 January 20X2.
c. Panych ceased to use a company- owned cargo plane on 30 September. The plane cost $ 7,000,000 and now has a carrying value of $ 2,400,000. The company plans to find a buyer as quickly as possible and has engaged a dealer to look for a buyer. The agent expects to find a buyer within the following six to eight months. The asking price is $ 2,000,000. The dealer will take a 3% commission on the sale.

How should each asset be reported on Panych’s 20X2 year- end balance sheet? Be specific as to classification and amount. Prepare journal entries to properly record the change of status of each asset.

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  • CreatedFebruary 17, 2015
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