Required Information [The following Information applies to the questions displayed below.] During the current year, Merkley Company disposed of three different assets. On January 1 of the current year, prior to the disposal of the assets, the accounts reflected the following: Asset Machine A Machine B Original Cost Machine C $ 33,000 53,000 76,200 Residual Value $ 3,000 4,000 6,900 Estimated Life 8 years 10 years 16 years Accumulated Depreciation (straight line) $22,500 (6 years) 39,200 (8 years) 51,975 (12 years) The machines were disposed of during the current year in the following ways: a. Machine A: Sold on January 1 for $10,000 cash. b. Machine B: Sold on December 31 for $9,500; received cash, $2,200, and a $7,300 Interest-bearing (12 percent) note receivable due at the end of 12 months. c. Machine C: On January 1, this machine suffered irreparable damage from an accident. On January 10, a salvage company removed the machine at no cost. 2. Explain the accounting rationale for the way that you recorded each disposal. Machine A: Disposal of a long-lived asset with the price below net book value results in a Machine B: Disposal of a long-lived asset with the price above net book value results in a Machine C: Disposal of a long-lived asset due to damage results in a remaining book value.