Disposal of Property and Equipment (Alternate is 8-71.) Rocawen is a leading provider of industrial automation power and controls. The company's annual report indicated that both accelerated and straight-line depreciation were used for its property and equipment. In addition, the annual report said: "Gains or losses on property transactions are recorded in income in the period of sale or retirement." Rockwell received $4 million for property that it sold. 1. Assume that Rockwell originally acquired the total property in question for $65 million and received the $4 million in cash. There was a loss of $8.5 million on the sale. Compute the accu- mulated depreciation on the property and equipment sold. Show the effects of the sale on the bal- ance sheet equation, identifying all specific accounts by name. 2.

(a) Show the journal entry and postings to T-accounts for the transaction in requirement 1.

(b) Repeat 2a, assuming that the cash sales price was $14 million cash instead of $4 million.