Answer Happy

On December 31, 2019, Splish Brothers Inc. owns a machine with a carrying amount of $774,000. The original cost and accumulated depreciation for the machine on this date are as follows: Machine $1,350,000 Accumulated depreciation 576,000 $774,000 Depreciation is calculated at $96,000 per year on a straight-line basis. A set of independent situations follows. For each situation, prepare the journal entry for Splish Brothers Inc. to record the transaction. Ensure that depreciation entries are recorded to update the machine's carrying amount before its disposal. Assume that Splish Brothers Inc. uses IFRS for financial statement purposes.
A fire completely destroyed the machine on August 31, 2020. An insurance settlement of $422,000 was received for this casualty. Assume e settlement was received immediately. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Date August 31, 2020 Depreciation Expense 64,000 Accumulated Depreciation - Machinery (To record depreciation on machinery) August 31, 2020 Cash 4,22.000 Accumulated Depreciation - Machinery 6,40,000 Gain on Disposal of Machinery Machinery (To record disposal of machinery) 64,000 2.88,000 13.50,000
On April 1, 2020, Splish Brothers sold the machine for $1,044,000 to Sunland Company. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit April 1, 2020 Depreciation Expense 24,000 Accumulated Depreciation - Machinery (To record depreciation on machinery) April 1, 2020 Cash 10.44,000 Accumulated Depreciation - Machinery 6,00,000 Loss on Disposal of Machinery 2,94,000 Machinery (To record disposal of machinery) 24,000 1100 13.50,000
On July 31, 2020, the company donated the machine to the Dartmouth City Council. The machine's fair value at the time of the donation was estimated to be $1.3 million. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit July 31, 2020 Depreciation Expense 56,000 Accumulated Depreciation - Machinery (To record depreciation on machinery) July 31, 2020 Contribution Expense 13,00,000 Accumulated Depreciation - Equipment 6,32,000 Loss on Disposal of Machinery 5,82,000 Machinery (To record disposal of machinery) 56.000 13.50,000