Question

The company’s fiscal year ends on December 31. Using the following information, compute depreciation for this machine for each of the 4 years using each of the following methods:
Straight-line method
Sum-of-years method
Double-declining method
Units-of-production

Year


Machine Hours

20X1


2,000

20X2


3,500

20X3


1,500

20X4


6,000

The ABC car repair shop purchased a machine in 20X1 at a cost of $20,000. The tractor was sold for $2,000 in 20X3. Depreciation recorded through the disposal totaled $16,000.
Prepare the journal entry to record the sale.
If the machine was sold for $10,000, what will the entry be?
The ABC car repair shop traded a new machine for an older model. The old model’s book value was $150,000 (original cost $350,000, less $200,000 accumulated depreciation) and its fair value was $200,000. ABC paid $40,000 to complete the exchange.
Prepare the journal entry to record the exchange.