On April 1, Year 5 a Company Discarded a Machine

question 169

Essay

On April 1, Year 5 a company discarded a machine that had cost $10,000 and had accumulated depreciation of $8,000 as of December 31, Year 4. The asset had a 5-year life and $0 residual value. Prepare the journal entries to record the updating of the depreciation expense and discarding of this asset in Year 5.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Internal Control Systems

Procedures and mechanisms implemented by a company to ensure integrity in financial reporting, compliance with laws and regulations, and effective and efficient operations.

Financial Misrepresentation

The act of intentionally misleading stakeholders about the financial condition or performance of a business.

Anti-Fraud Measures

Strategies and tools implemented by organizations to detect, prevent, and eliminate fraud.