Depreciation
Question
Onslow Co. purchases a used machine for $144,000 cash on January 2 and readies it for use the next day at a $6,000
cost. On January 3, it is installed on a required operating platform costing $1,200, and it is further readied for operations. The company predicts the machine will be used for six years and have a $17,280 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.
8.
value:
1.53 points
Required information
| Required: | |
| 1. | Prepare journal entries to record the machine’s purchase and the costs to ready and install it. Cash is paid for all costs incurred. |
9.
value:
1.53 points
Required information
| 2. | Prepare journal entries to record depreciation of the machine at December 31. |
| (a) | Its first year in operations. |
| (b) | The year of its disposal. |
Required information
| 3. | Prepare journal entries to record the machine’s disposal under each of the following separate assumptions: |
| (a) | It is sold for $24,500 cash. |
| (b) | It is sold for $98,000 cash. |
| (c) | It is destroyed in a fire and the insurance company pays $35,000 cash to settle the loss claim. |
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