Finesse Co. purchases and installs a machine on January 1, 2011, at a total cost

Question

Finesse Co. purchases and installs a machine on January 1, 2011, at a total cost of $101,500. Straight-line depreciation is taken each year for four years assuming a 8-year life and no salvage value. The machine is disposed of on July 1, 2015, during its fifth year of service.

Prepare entries to record the partial year’s depreciation on July 1, 2015. (Omit the "$" sign in your response.)

Prepare entries to record the disposal under the following separate assumptions:

July 1

Finesse receives an insurance settlement of $42,630 resulting from the total destruction of the machine in a fire. (Round your intermediate calculation and final answers to the nearest dollar amount.Omit the "$" sign in your response.)

Finesse Co. purchases and installs a machine on January 1, 2011, at a total cost of $101,500. Straight-line depreciation is taken each year for four years assuming a 8-year life and no salvage value. The machine is disposed of on July 1, 2015, during its fifth year of service.

Explanation / Answer

Particulars Amount Cost of the Asset =      101,500 Life (in Years for depreciation Given )                 8 Depreciation per year under SLM Basis:        12,688 Depreciation for 2015 (Jan-July) 6 Months          6,344 Accumulated Depreciation        57,094 Net Block Value As at july 1st        44,406 Entry for Partial Depreciation: Date General Journal Debit Credit July 1st Depreciation Expenses - Machinery          6,344     To Accumulated Depreciation -Machinery           6,344 Disposable Entries: 1) Disposed At 47,071 $ for Cash Date General Journal Debit Credit July 1st Cash          47,071 Accumulated Depreciation          57,094 To Machinery       101,500 To Profit on sale of Fixed Assets           2,665 2) $ 42,630 Insurance Settlement Received Date General Journal Debit Credit July 1st Cash          42,630 Accumulated Depreciation          57,094 Loss on sale of Machinery          1,776 To Machinery       101,500

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