1. Fantastic Limited purchased an equipment for $160,000 on 1 January 2014. It has been depreciated using the straight-line method based on an estimated residual value of $10,000 and an estimated useful life of 5 years. On 31 May 2014, the equipment was sold for cash of $90,000. The year end of Fantastic Limited is 31 December.

   Required:

   1. (a) Prepare the journal entry to record depreciation expense on equipment for the year 2014 up to the date of disposal on 31 May 2014. (Narration is NOT required.) (2 marks)

   2. (b) Prepare journal entries to record the disposal of equipment on 31 May 2014.