A machine was purchased during 2019 for $3,750,000. At the time of purchase it was estimated that the machine would have a useful life of ten years and a residual value of $750,000. During 2025 the machine was sold for $1,850,000. The company uses straight-line depreciation, but does not record depreciation expense in the year of acquisition or disposal.

Required:

a. Prepare the journal entry to record the derecognition of the asset in 2025.

b. Assume that rather than using the straight-line method, the company uses the declining balance method of depreciation at a 20% rate. Prepare the journal entry to record the derecognition of the asset in 2025.