Explain what i need to do with the transaction

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Reference no: EM133496073

Question: At the beginning of the current period, Grande Ltd sold some old machinery to Petit for $350,000. The machinery originally cost Grande Ltd $100,000 is four years old and had accumulated depreciation of $80,000 at the date of the sale. The remaining useful life of the machinery was confirmed by independent experts engaged by Petit Ltd to be a further two years. Once again, our CEO is absolutely delighted that we have recognized a gain on sale of $330,000 on sale of the machinery. This will ensure we hit our profit targets and achieve our bonuses this year. The Chief Accountant was mumbling something about reversing these entries and I can't understand why we would want to do that when these are valid legitimate transactions. Please explain what I need to do with the transaction and show any journal entries necessary when preparing the group's accounts.

Reference no: EM133496073

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