On December 31, 2013, Grey Inc. owns a machine with a carrying amount of $940,000. The original cost

On December 31, 2013, Grey Inc. owns a machine with a carrying amount of $940,000. The original cost and accumulated depreciation for the machine on this date are as follows: Machine …………………… $1,300,000 Accumulated depreciation …………….. 360,000 $940,000 Depreciation is calculated at $60,000 per year on a straight-line basis. Instructions A set of independent situations follows. For each situation, prepare the journal entry for Grey Inc. to record the transaction. Ensure that depreciation entries are recorded to update the machine s carrying amount before its disposal. (a) A fire completely destroys the machine on August 31, 2014. An insurance settlement of $430,000 was received for this casualty. Assume the settlement was received immediately. (b) On April 1, 2014, Grey sold the machine for $1,040,000 to Dwight Company. (c) On July 31, 2014, the company donated this machine to the Dartmouth City Council. The machine s fair value at the time of the donation was estimated to be $1.1 million.

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