P9-3A Pine Company
In this tutorial, we will look asset retirement journal entries for Machinery, Forklift, and Truck at Pine company. It is necessary to record depreciation, as well as capital gains and losses on the retirement of the assets.
- Student: Tyler Muffty
- Textbook: Principles of Accounting II
- Course: Accounting Week 3
Pine Company had the following assets on January 1, 2017. During 2017, each of the assets was removed from service. The machinery was retired on January 1. The forklift was sold on June 30 for $12,000. The truck was discarded on December 31.
|Item||Cost||Purchase Date||Useful Life||Salvage Value|
This asset has been fully utilized, so we only need to worry about accumulated depreciation and closing out machinery.
First, figure out how much time has elapsed, in this case 3.5 years. Next, calculate depreciation for 6 months, then close out the account with a gain or loss.
|Gain on Disposal||3000|
We know the truck was disposed with a loss, so we just need to record the annual depreciation, then close the account with a loss.
|Loss on Disposal:||10600|
|Loss on Retirement||10600|
|Delivery Truck (Vehicles)||29600|