On December 31, 2019, Splish Brothers Inc. owns a machine with a carrying amount of $774,000. The original cost and accu
Posted: Mon May 30, 2022 7:50 am
- On December 31 2019 Splish Brothers Inc Owns A Machine With A Carrying Amount Of 774 000 The Original Cost And Accu 1 (37.99 KiB) Viewed 11 times
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 the 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.) Date Account Titles and Explanation Debit Credit August 31, 2020 Depreciation Expense 64,000 Accumulated Depreciation - Machinery (To record depreciation on machinery) August Cash 4,22,000 31, 2020 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 Accumulated Depreciation - Machinery (To record depreciation on machinery) April 1, Cash 2020 Accumulated Depreciation - Machinery Loss on Disposal of Machinery Machinery (To record disposal of machinery) 24,000 10.44.000 6,00,000 2,94,000 24,000 H 13,50,000
Date July 31, 2020 July 31, 2020 Account Titles and Explanation Depreciation Expense Accumulated Depreciation - Machinery (To record depreciation on machinery) Contribution Expense Accumulated Depreciation - Equipment Loss on Disposal of Machinery Machinery (To record disposal of machinery) Debit 56,000 13,00,000 6,32,000 5,82,000 Credit 56,000 13,50,000