[The following information applies to the questions displayed below.] During the current year, Merkley Company disposed...

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[The following information applies to the questions displayed below.] During the current year, Merkley Company disposed of three different assets. On January 1 of the current year, prior to the disposal of the assets, the accounts reflected the following: Asset Machine A Machine B Machine C Original Cost $ 42,000 53,000 75,200 Residual Value $ 3,000 4,000 6,700 Estimated Life 12 years 8 years 17 years Accumulated Depreciation (straight line) $32,500 (10 years) 36,750 (6 years) 48,353 (12 years) The machines were disposed of during the current year in the following ways: a. Machine A: Sold on January 1 for $9,000 cash. b. Machine B: Sold on December 31 for $10,625; received cash, $2,300, and a $8,325 interest-bearing (12 percent) note receivable due at the end of 12 months. c. Machine C: On January 1, this machine suffered irreparable damage from an accident. On January 10, a salvage company removed the machine at no cost. 2. Explain the accounting rationale for the way that you recorded each disposal. Machine A: Disposal of a long-lived asset with the price below net book value results in a Machine B: Disposal of a long-lived asset with the price above net book value results in a Machine C: Disposal of a long-lived asset due to damage results in a remaining book value. [The following information applies to the questions displayed below.] During the current year, Merkley Company disposed of three different assets. On January 1 of the current year, prior to the disposal of the assets, the accounts reflected the following: Asset Machine A Machine B Machine C Original Cost $ 42,000 53,000 75,200 Residual Value $ 3,000 4,000 6,700 Estimated Life 12 years 8 years 17 years Accumulated Depreciation (straight line) $32,500 (10 years) 36,750 (6 years) 48,353 (12 years) The machines were disposed of during the current year in the following ways: a. Machine A: Sold on January 1 for $9,000 cash. b. Machine B: Sold on December 31 for $10,625; received cash, $2,300, and a $8,325 interest-bearing (12 percent) note receivable due at the end of 12 months. c. Machine C: On January 1, this machine suffered irreparable damage from an accident. On January 10, a salvage company removed the machine at no cost. 2. Explain the accounting rationale for the way that you recorded each disposal. Machine A: Disposal of a long-lived asset with the price below net book value results in a Machine B: Disposal of a long-lived asset with the price above net book value results in a Machine C: Disposal of a long-lived asset due to damage results in a remaining book value.