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