Smirk Co. purchased machinery on July 1, 2016 for $68,000, and intends to use the machinery for 10 years. After 10 years, Smirk estimates the machinery will sell for $3,000. Smirk will use the revaluation model to account for machinery. The fair value of machinery on December 31, 2019 (the first revaluation date) is $50,000.

Required

(a) If Smirk uses the double diminishing balance method to calculate depreciation, calculate depreciation expense for 2016

(b) Assuming Smirk uses the straight-line method for depreciation, prepare all necessary journal entries relating to the machinery at December 31, 2019.

(c) On July 1, 2020, Smirk gets a great deal on some new machinery and sells its old machinery for $45,000 cash. Prepare all journal entries necessary at July 1, 2020 relating to its old machinery (i.e. ignoring the recognition of its new machinery).