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Answer:
Follows are the solution to this question:
Explanation:
30.06.2017: Cash/Bank Account Dr. $450000
Loss to Plant in revenue Dr. $150,000
Cumulative Depreciation Dr. $300000
To the Factory Account $900000
(Selling the plant at a loss of $150000)
Start buying by Jordan Ltd. of Equipment
30.06.2017 Plant Account Dr. $ 450000
To Cash /Bank Account $450000
(Being an Equipment Buyer)
30.06.2018 Depreciation Account Dr. $90000
To the Depreciation Accrued $90000
(Depreciation has been claimed for the plant)
30.06.2018 Profit and Loss Account Dr. $90000
To Depreciation Account $90000
(P&L Account paid for depreciation)
The Journal Entries to record the sale of plant to Jordan Ltd in the books of Liala Ltd are as follows:
Debit Accounts Receivable (Jordan Ltd) $450,000
Credit Sale of Plant $450,000
To record the sale of plant to Jordan Ltd on account.
Debit Sale of Plant $600,000
Debit Accumulated Depreciation $300,000
Credit Property, Plants, and Equipment $900,000
To record the transfer of sold plant to Sale of Plant account.
Debit Loss on Sale of Plant $150,000
Credit Sale of Plant $150,000
To record the loss from sale of plant
Data Analysis:
1 July 2016:
Accounts Receivable (Jordan Ltd) $450,000 Sale of Plant $450,000
Sale of Plant $600,000 Accumulated Depreciation $300,000 Property, Plants, and Equipment $900,000
Loss on Sale of Equipment $150,000 Sale of Plant $150,000 ($900,000 - $300,000 - $450,000)
Thus, the sale of the plant resulted to a loss of $150,000 being the difference between the carrying value of $600,000 and the sale proceeds of $450,000.
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