Finesse Co. purchases and installs a machine on January 1, 2011, at a total cost of $92,750.

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Finesse Co. purchases and installs a machine on January 1, 2011, at a total cost of $92,750. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is disposed of on July 1, 2015, during its fifth year of service. Prepare entries to record the partial year’s depreciation on July 1, 2015, and to record the disposal under the following separate assumptions:
(1) The machine is sold for $35,000 cash and
(2) Finesse receives an insurance settlement of $30,000 resulting from the total destruction of the machine in a fire.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Fundamental Accounting Principles

ISBN: 978-0078110870

20th Edition

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

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