Prepare a depreciation schedule: Z Company’s fiscal year starts July 1st and ends June 30th. The company purchased a new machine which was installed and operational at the beginning of the second quarter in October. The machine cost $145,800 and has an estimated useful life of three years and estimated salvage value of $5,400.
Z Company receives an offer for the truck for 9,500 at the end of the third year.
a. What factors should Z Company consider in determining whether to sell or keep the machine?
b. Assume the machine is sold. Prepare the appropriate journal entry showing sale of the machine under each depreciation schedule.