Hattie Corporation recently decided to dispose of a significant portion of its plant assets. The assets to be held for disposal are summarized below:

1Machinery is depreciated by the straight- line method, assuming a six- year life with no scrap value. The asset was acquired three years ago. 2Equipment is depreciated by the straight- line method, assuming a 10- year life with no scrap value. The asset was acquired four years ago.
At the time the decision was made to dispose of the assets, the book values of the assets approximated their fair values. Assume costs to sell the assets are zero. While the assets were held for disposal, the following changes in fair value occurred:

Required
Prepare any journal entries necessary to account for the changes in fair value for years 1 and 2.

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Description Cost Accumulated depreciation Net book value at year end Machinery Equipment $696,000 S1,550,000 348,000 $348,000 5 930,000 (620,000) Subsequent Year End of Year 1 Fair value End of Year 2 Fair value Machinery Equipment $200,000 $215,000 $950,000 900,000