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Exercise 11-10 (Algo) Disposal of property, plant, and equipment [LO11-2] Mercury Inc. purchased equipment in...

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Finance

Exercise 11-10 (Algo) Disposal of property, plant, and equipment [LO11-2]

Mercury Inc. purchased equipment in 2019 at a cost of $294,000. The equipment was expected to produce 530,000 units over the next five years and have a residual value of $29,000. The equipment was sold for $150,000 part way through 2021. Actual production in each year was: 2019 = 76,000 units 2020 = 121,000 units 2021 = 61,000 units. Mercury uses units-of-production depreciation, and all depreciation has been recorded through the disposal date. Required: 1. Calculate the gain or loss on the sale. 2. Prepare the journal entry to record the sale. 3. Assuming that the equipment was instead sold for $179,000, calculate the gain or loss on the sale. 4. Prepare the journal entry to record the sale in requirement 3.

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Assuming that the equipment was instead sold for $179,000, calculate the gain or loss on the sale. (Do not round intermediate calculations.)

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