During 2010, Ly company disposed of two different assets. On January 1, 2010 pri

Question

During 2010, Ly company disposed of two different assets. On January 1, 2010 prior to their disposal, the accounts reflected the following

Assets Original course residual value estimated life Accumulated dep.
Machine A: $24000 $2000 5 years $17600(4years)
Machine B: 59200 3200 14years 48000(12 years)

The machines were disposed of in the following ways:
A)Machine A: sold on January 1, 2010 for $5750 cash
B) Machine B: On January 1, 2010, this machine suffered irreparable damage from an accident and was removed by a salvage company at no cost.

Require:
1) Give the journal entries related to the disposal of each machine at the beginning of 2010
2)Explain the accounting rationale for the way that you recorded each disposal

Explanation / Answer

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