A machine cost $239,800, has annual depreciation expense of $47,960, and has accumulated depreciation of $119,900 on December 31, 2020. On April 1, 2021, when the machine has a fair value of $96,320, it is exchanged for a similar machine with a fair value of $281,800 and the proper amount of cash is paid. The exchange lacked commercial substance. Required:
Prepare all entries that are necessary at April 1, 2021.

April 1, 2021

Dr Depreciation expense11,990

Cr Accumulated depreciation 11,990

April 1, 2021

Dr Machinery, New$281,800

Dr Accumulated depreciation- Machinery 123,890

Dr Loss on disposal of machinery 19,590

Cr Cash 185,480

Cr Machinery, Old$239,800

Explanation:

Preparation of all entries that are necessary at April 1, 2021.

April 1, 2021

Dr Depreciation expense11,990

Cr Accumulated depreciation 11,990

(47,960 * 3/12)

(Being To record depreciation)

April 1, 2021

Dr Machinery, New$281,800

Dr Accumulated depreciation- Machinery (111,900+11,990)123,890

Dr Loss on disposal of machinery 19,590

[185,480+$239,800-($281,800+123,890)]

Cr Cash 185,480

($281,800-$96,320)

Cr Machinery, Old$239,800

(Being To record the exchange of machinery)

answer; the landlord can sue the renter,and the renter loses the security deposit;