Aslam Manufacturing Ltd. has three assets. Aslam€™s year-end is June 30. The assets€™ costs, estimated residual value, useful life, and their carrying value on July 1, 2014 are listed in the following table:

During 2014, Aslam completed the following transactions related to asset retirement: August 1 Sold Machine 2 for $200,000; received $50,000 cash and an interest-bearing (6%) note receivable for the remainder, due on July 31, 2015.
December 31 Sold Machine 1 for $50,000 cash.
February 2, 2015 The engine of Machine 3 broke down and was determined irreparable. The insurance company agreed to compensation of $120,000; and sent a cheque for $20,000 and a note receivable for the remaining $100,000, due on February 28, 2015.
Requirements
1. What is the age of each asset on July 1, 2014?
2. Prepare all journal entries related to the disposal of each of the assets in 2014 and 2015.
3. What is the total gain or loss from the disposal of these three assets?

Transcribed Image Text:

Cost $228,000 426,000 332,000 Residual Value S 4,000 12,000 8,000 Useful Life Machine 1 Machine 2 Machine 3 Carrying Value $ 52,000 210,375 161,000 12