Posted: February 11th, 2015

Intermediate Accounting

Paper, Order, or Assignment Requirements

Task 3.2
Disposal of fixed assets

Instructions:

1. After reading the study material for this module works the following exercises from chapter 10 of the E-book Kieso, DE, Weygandt, JJ, & Warfield, TD (2010). Intermediate accounting (13th ed.). Hoboken, NJ: Wiley.

a. BE10-14 (p.517) (sale of fixed assets, 8 pts.)
b. BE10-15 (p.517) (sale of fixed assets, 8 pts.)
c. E10-24 (P.525) (Disposal of Assets 12 pts.)
d. E10-25 (P.525) (Disposition of assets, 10 pts.)

2. You must submit answers to the exercises in full.
3. Save the task in Word or Excel format

Task 3.2

Disposal of fixed assets

Instructions:

1. After reading the study material for this module works the following exercises from chapter 10 of the E-book Kieso, DE, Weygandt, JJ, & Warfield, TD (2010). Intermediate accounting (13th ed.). Hoboken, NJ: Wiley.

a. BE10-14 (p.517) (sale of fixed assets, 8 pts.)
b. BE10-15 (p.517) (sale of fixed assets, 8 pts.)
c. E10-24 (P.525) (Disposal of Assets 12 pts.)
d. E10-25 (P.525) (Disposition of assets, 10 pts.)

2. You must submit answers to the exercises in full.
3. Save the task in Word or Excel format

BE10-14 Ottawa Corporation owns machinery that cost $20,000 when purchased on July 1, 2007. Depreciation has been recorded at a rate of $2,400 per year, resulting in a balance in accumulated depreciation of $8,400 at December 31, 2010. The machinery is sold on September 1, 2011, for $10,500. Prepare journal entries to (a) update depreciation for 2011 and (b) record the sale.

BE10-15 Use the information presented for Ottawa Corporation in BE10-14, but assumes the machinery is sold for $5,200 instead of $10,500. Prepare journal entries to (a) update depreciation for 2011 and (b) record the sale.

E10-24 (Entries for 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

Accumulated depreciation                360,000

Book value          $ 940,000

Depreciation is computed at $72,000 per year on a straight-line basis.

Instructions

Presented below is a set of independent situations. For each independent situation, 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.

(a)Afire completely destroys the machine on August 31, 2011. An insurance settlement of $630,000 was received for this casualty. Assume the settlement was received immediately.

(b)On April 1, 2011, Chrysler sold the machine for $1,040,000 to Avanti Company.

(c)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.

E10-25 (Disposition of Assets) On April 1, 2010, Pavlova Company received a condemnation award of $410,000 cash as compensation for the forced sale of the company’s land and building, which stood in the path of a new state highway. The land and building cost $60,000 and $280,000, respectively, when they were acquired. At April 1, 2010, the accumulated depreciation relating to the building amounted to $160,000. On August 1, 2010, Pavlova purchased a piece of replacement property for cash. The new land cost $90,000, and the new building cost $380,000.

Instructions

Prepare the journal entries to record the transactions on April 1 and August 1, 2010.