During 2014, Bhumika Company disposed of two different assets. On January 1, 2014, prior to the assets'
Question:
The machines were disposed of in the following ways:
a. Machine A: Sold on January 2, 2014, for $8,200 cash. b. Machine B: On January 2, 2014, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost.
Required:
1. Give the journal entries related to the disposal of each machine at the beginning of 2014.
When no cash is received on disposal, the loss on disposal will equal the book value of the asset at the time of disposal.
Loss on disposal for Machine A equals $10,400.
Loss on disposal for Machine B equals $7,250.
2. Explain the accounting rationale for the way that you recorded each disposal?
Step by Step Answer:
Fundamentals of Financial Accounting
ISBN: 978-1259103292
4th Canadian edition
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh