Entries: Disposition of Assets
On December 31, 2010, Chrysler Inc. has a machine with a book value of $940,000. The original cost and related accumulated depreciation at this date are as follows.
Machine $1,300,000
(minus)
Accumulated Depreciation $ 360,000
(equals)
Book Value $ 940,000
Depreciation is computed at $72,000 per year on a straight-line basis.
Instructions:
Please indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal.
On July 31, 2011, the company donated this machine to the Mountain King City Council. The fair value of the machine at the time of the donation was estimated to be $1,100,000.