A machine was purchased during 2013 for $3,000,000. At the time of purchase it was estimated that

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A machine was purchased during 2013 for $3,000,000. At the time of purchase it was estimated that the machine would have a useful life of nine years (ignoring year of purchase) and a residual value of $700,000. During 2019 the machine was sold for $1,700,000. The company does not record depreciation expense in the year of acquisition or disposal. The company uses the straight-line method to derive depreciation expense.
Required:
a. Prepare the journal entry to record the derecognition of the asset in 2019.
b. Assume that rather than using the straight-line method the company uses the declining balance method to derive depreciation expense. The rate will be 2/9. Prepare the journal entry to record the derecognition of the asset in 2019.
c. What is the aggregate income statement effect of using the straight-line and declining balance method from 2013 to 2019? What is the net cash outflow associated with the purchase and subsequent sale of this machine? Is it coincidence or logical that the two income amounts and the net cash flows are the same (subject to rounding)?
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