Please I need help with the circled question for Biltrite Module 11. I am a little bit confused at the Audit Adjustment 1, 10, 11. Thank you.

WP 11.4 BILTRITE BICYCLES, INC. Factory Equipment Additions and Disposals December 31, 2009 Prepared by: Date: Reviewed by: Date: ACCUMULATED DEPRECIATION ASSET 12/31/08 Audited Balance 2009 Additions: Assembly Line #1 refurbishing Assembly Line #2 refurbishing Ransport computerized paint system Welding equipment for lines 1 and 2 Computerized quality control system Stamping and forming equipment for onepiece frame Additions sampled (See WP 11.3) Beginning Balance plus Additions 2009 Disposals: Assembly Lines 1 and 2 equipment Paint system Welding equipment Presses and forming equipment $320,000,000 > $15,600,000 $22,340,000 $16,800,000 $5,760,000 $11,110,000 $147,460,000 > W W E E E $5,650,000 E $12,600,000 $409,860,000 ($28,360,000) ($12,630,000) ($3,990,000) ($4,880,000) ($26,345,000) ($12,360,000) ($2,955,000) ($3,200,000) $360,000,000 * $42,060,000 # $144,660,000 * $360,000,000 =============== WP 11 $144,660,000 ============== WP 11 2009 Depreciation Provision 12/31/09 Ledger Balance GAIN/(LOSS) ON DISPOSAL $4,000,000 $4,000,000 * Audit Adjustments: AJE 1 AJE 10 AJE 11 12/31/09 Audited Balance $4,000,000 ============== Recalculation of gain on disposal: Cost of equipment acquired in various years Accumulated depreciation (including 1/2 year in 2007) Book value Selling price Gain Per general ledger Error $49,860,000 & $41,770,000 % $8,090,000 $9,000,000 R $910,000 $4,000,000 ($3,090,000) ============= Audit Adjustment No. 10 9485 Gain/Loss on Disposal of Plant Assets 1535 Accumulated DepreciationFactory Equipment To correct for error in calculating accumulated depreciation on disposals of factory equipment. Audit Adjustment No. 11 5300 Cost of Goods SoldPike's Peak Mountain Bike 1535 Accumulated DepreciationFactory Equipment To correct for underdepreciation on the excess of additions over disposals. Explanation of audit legends: > Traced to 2008 audit workpapers and 1/1/09 ledger balance W Examined work orders and traced: Materials to materials requisitions and invoices Direct labor to time cards Direct and indirect overhead to company analyses E Examined underlying documentation # Recalculated * Traced to 12/31/09 general ledger & Traced to plant assets ledger R Examined remittance advice and bank statement % Traced to 12/31/08 plant assets ledger and calculated 1/2 year's depreciation for 2009 Biltrite Journal Entry: Cash Accumulated DepreciationFE Factory Equipment Gain on Disposal $9,000,000 $44,860,000 $49,860,000 $4,000,000 Correct Entry: Cash Accumulated DepreciationFE Factory Equipment Gain on Disposal $9,000,000 $41,770,000 $49,860,000 $910,000