Part III

Marvel Company purchased motor vehicle costing $1,200,000 on 15 September 2017. The motor vehicle has an estimated useful life of 5 years and residual value of $200,000. Straight-line depreciation method is used. Half-year convention is adopted. On 5 March 2020, the company sold the motor vehicle for $400,000 cash. The company adjusts its accounts annually with the year-end at 31 December.

Required:

1. (a) Prepare the journal entries to update the depreciation before disposal in 2020; (2 marks)

2. (b) Prepare the journal entries on 5 March 2020 regarding to the disposal. (4 marks)