Question: Webb Net manufacturing purchased a new net weaving machine on January 1, 2009, for $500,000. The new machine has an estimated life of five years

Webb Net manufacturing purchased a new net weaving machine on January 1, 2009, for $500,000. The new machine has an estimated life of five years and an estimated salvage value of $100,000. It is company policy to use straight-line depreciation for all of its machines.

REQUIRED:

a. Assume that Webb Net Manufacturing sells this machine on January 1, 2012, for $325,000. Prepare the entry to record this transaction.

b. Assume that Webb Net Manufacturing sells this machine on June 30, 2012, for $320,000. Prepare the entry or entries to record this transaction.

c. Assume that Webb Net Manufacturing trades in this machine for a tract of land on January 1, 2012. The list price of the land is $250,000, and it has an appraised value of $210,000. The company is granted a trade-in allowance on the machine is appraised at $75,000. Prepare the entry to record the trade-in, assuming that the land is valued as follows:

(1) The FMV of the assets received.

(2) The FMV of the assets given up.

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