Marriott International is a worldwide operator and franchisor of hotels and related lodging facilities totaling over $1.4 billion in property and equipment. It also develops, operates, and markets time-share properties totaling nearly $2 billion. Assume that Marriott replaced furniture that had been used in the business for five years. The records of the company reflected the following regarding the sale of the existing furniture:
Furniture (cost) ...... $6,000,000
Accumulated depreciation . 5,500,000
Required:
1. Give the journal entry for the disposal of the furniture, assuming that it was sold for
(a) $500,000 cash
(b) $1,600,000 cash
(c) $400,000 cash
2. Based on the three preceding situations, explain the effects of the disposal of an asset.