Answer:
A)
Loss on Fire 280,720 debit
Acc depreciation 506,000 debit
Cash 643,280 debit
Equipment 1,430,000 credit
B)
Acc depreciation 526,000 debit
Cash 1,555,480 debit
Equipment 1,430,000 credit
Gain at disposal 608,480 credit
C)
charitable contribution 1,645,600 debit
accumulated depreciation 500,500 debit
equipment 1,430,000 credit
gain on disposal 716,100 credit
<u>Questions</u>
A Fire completely destroys the machine on August 31, 2021. An insurance settlement of $643,280 was received for this casualty. Assume the settlement was received immediately.
B On April 1, 2021, Tritt sold the machine for $1,555,840 to Dwight Yoakam Company.
C On July 31, 2021, 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 $1,645,600.
Explanation:
In all cases, the company will write-off the equipment and acc depreciation
A.-
complete depreciation for 2020: 66,000
depreciation until August 31th: 66,000 x 8/12 = 44,000
Total depreciation 104,000
book value 1,034,000 - 104,000 = 924,000
loss: 924,000 - 643,280 = 280,720
b)
complete depreciation for 2020: 66,000
depreciation until April 31th: 66,000 x 4/12 = 22,000
Total depreciation 88,000
book value 1,034,000 - 88,000 = 946,000
1,555,480 - 946,000 = 608,480
c)
complete depreciation for 2020: 66,000
depreciation until July 31th: 66,000 x 7/12 = 38,500
Total depreciation 104,500
book value 1,034,000 - 104,500 = 929,500
gain: 1,645,600 - 929,500 = 716.100
