Recognize the depreciation expense

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Reference no: EM131203646

A machine cost $240,000, has annual depreciation expense of $48,000, and has accumulated depreciation of $120,000 on December 31, 2014. On April 1, 2015, when the machine has a fair value of $96,000, it is exchanged for a similar machine with a fair value of $288,000 and the proper amount of cash is paid. The exchange lacked commercial substance. Instructions (a) Prepare an journal entry that is necessary to recognize the depreciation expense on April, 2015. (b) Show the calculation of the amount of the gain or loss to be recognized from the disposal of the machine. (c) Prepare an entry that is necessary to record the exchange of the machines on April 1, 2015.

Reference no: EM131203646

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