Aldergrove Farms acquired a machine and later disposed of it. The company depreciates machinery on a straight-line basis.
| Date | Event |
|---|
| January 1, 2024 | Purchased machinery for $80,000 cash. Estimated useful life 8 years; residual value $8,000. |
| December 31, 2024 | Recorded the annual depreciation charge. |
| December 31, 2025 | Recorded the annual depreciation charge. |
| January 1, 2026 | Sold the machinery for $65,000 cash. |
Required: Prepare the journal entries for the purchase, each year’s depreciation, and the disposal. The annual depreciation is (80,000 − 8,000) ÷ 8 = $9,000. Determine the carrying amount at disposal and record the resulting gain.