Higher Company had the following disposals of production equipment during 2006:
Equipment ID # /Purchase Date/Original Cost/Date of Disposal/Disposal Proceeds/Useful Life/Depreciation Method
301 2/28/1998 $70,300 10/3/2003 $14,300 10 Straight-line
415 7/3/2005 $96,000 7/19/2002 $6,300 5 150% declining-balance
573 6/15/2004 $94,500 3/21/2002 $38,000 6 Sum-of-the-years'-digits
Higher's policy is to charge a full year's depreciation in the year of purchase if an asset is purchased before July 1. For assets purchased after July 1, only one-half year's depreciation is charged. During the year of disposal, one-half year's depreciation is charged if the asset is sold after June 30. No depreciation is charged during the year of disposal if the asset is sold before July 1. In all three cases above, estimated residual value at the time of acquisition was zero.
Prepare Journal entries to record the above disposals.
Please find attached solution for the first equipment. Please verify disposal dates for the last ...
The solution examines deprecation methods for disposals of production.