Page 120 - Demo

Ch(5): Plant Assets Disposal117Exercise (5-1):Presented below are selected transactionsat ArwaCompany for 2018.Jan,1: Retired a piece of machinery that was purchased on January 1, 2008. Themachine cost BD75,000 on that date. It had a useful life of 10-year withno salvage value.June 30: Sold equipment that was purchased on January 1, 2015. The equipment cost BD45,000. It had a useful life 5-year with no salvage value. The equipment was sold for BD14,000.Dec,31: Discarded a delivery truck that waspurchased on January 1,2014. The truck cost BD33,000. It was depreciated based on a 6-year useful life with a BD3,000 salvage value.Required:Prepare journal entries for the previous transactions. The Company uses straightlinedepreciation (Assume depreciation is up to the above date of the previous transactions).Exercise (5-2):On July 1,2018, Abdulla Company invested BD720,000 in a mine estimated to have 900,000 tons of ore of uniform grade. During the last 6 months of 2018, 100,000 tons of ore were mined and sold.Required:Prepare the journal entry to record depletion expensefor 2018.Exercises