CP9-2 Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5]

During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following:

Asset Original Cost Residual Value Estimated Life Accumulated Depreciation (straight-line) Machine A $ 76,200 $ 4,200 15 years $ 62,400 (13 years) Machine B 20,000 2,000 8 years 13,500 (6 years)

The machines were disposed of in the following ways:

a. Machine A: Sold on January 2 for $20,000 cash. b.

Machine B: On January 2, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost.

Required: 1. & 2.

Prepare the journal entries related to the disposal of Machine A and B on the January 2 of the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

TIP: When no cash is received on disposal, the loss on disposal will equal the book value of the asset at the time of disposal.