Smith's Auto YardSmith's Auto Yard
purchased equipment on
JanuaryJanuary
?1,
20162016?,
for
$ 52 comma 000$52,000.
Suppose
Smith's Auto YardSmith's Auto Yard
sold the equipment for
$ 38 comma 000$38,000
on
December 31 comma 2017.December 31, 2017.
Accumulated Depreciation as of
DecemberDecember
?31,
20172017?,
was
$ 16 comma 000$16,000.
Journalize the sale of the? equipment, assuming? straight-line depreciation was used.
?First, calculate any gain or loss on the disposal of the equipment.
Market value of assets received
Less: Book value of asset disposed of
Cost
Less: Accumulated Depreciation
Gain or (Loss)
?Now, journalize the sale of the equipment. ?(Record debits? first, then credits. Select the explanation on the last line of the journal entry? table.)
Date
Accounts and Explanation
Debit
Credit
Dec. 31
Smith's Auto YardSmith's Auto Yard
purchased equipment on
JanuaryJanuary
?1,
20162016?,
for
$ 52 comma 000$52,000.
Suppose
Smith's Auto YardSmith's Auto Yard
sold the equipment for
$ 38 comma 000$38,000
on
December 31 comma 2017.December 31, 2017.
Accumulated Depreciation as of
DecemberDecember
?31,
20172017?,
was
$ 16 comma 000$16,000.
Journalize the sale of the? equipment, assuming? straight-line depreciation was used.
?First, calculate any gain or loss on the disposal of the equipment.
| Market value of assets received | ||
| Less: Book value of asset disposed of | ||
| Cost | ||
| Less: Accumulated Depreciation | ||
| Gain or (Loss) |
?Now, journalize the sale of the equipment. ?(Record debits? first, then credits. Select the explanation on the last line of the journal entry? table.)
| Date | Accounts and Explanation | Debit | Credit | ||
| Dec. 31 | |||||
Related questions
Sale of Equipment
Equipment was acquired at the beginning of the year at a cost of $38,500. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of ten years and an estimated residual value of $750.
a. What was the depreciation for the first year?
$
b. Assuming the equipment was sold at the end of year 2 for $9,480, determine the gain or loss on the sale of the equipment.
$ Loss
Feedback
Book value is the asset cost minus accumulated depreciation. In the first year, the balance in the accumulated depreciation account is zero.
Compare the book value to the sale price. If the book value is more than the sale price, the equipment was sold for a loss. If the book value is less than the sale price, the equipment was sold for a gain.
Learning Objective 3.
c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
| Cash | |||
| Accumulated Depreciation-Equipment | |||
| Loss on Sale of Equipment | |||
| Equipment |
Feedback
Be sure to record the selling price of the fixed asset. If the company no longer has the fixed asset what account(s) would need to be eliminated? Was there a gain or a loss on the sale?
New lithographic equipment, acquired at a cost of $875,000 atthe beginning of a fiscal year, has an estimated useful life offive years and an estimated residual value of $75,300. The managerrequested information regarding the effect of alternative methodson the amount of depreciation expense each year. On the basis ofthe data presented to the manager, the double-declining-balancemethod was selected.
In the first week of the fifth year, the equipment was sold for$128,100.
1. Determine the annual depreciation expensefor each of the estimated five years of use, the accumulateddepreciation at the end of each year, and the book value of theequipment at the end of each year by the following methods:
a. Straight-line method
Year | Depreciation Expense | Accumulated Depreciation End of Year | Book Value End of Year |
1 ________________ ______________________ _____________________________
2 ________________ ______________________ _____________________________
3 ________________ ______________________ _____________________________
4 ________________ ______________________ _____________________________
5 ________________ ______________________ ____________________________
b. Double-declining-balance method
Year | Depreciation Expense | Accumulated Depreciation End of Year | Book Value End of Year |
1 ________________ ______________________ _____________________________
2 ________________ ______________________ _____________________________
3 ________________ ______________________ _____________________________
4 ________________ ______________________ _____________________________
5 ________________ ______________________ ____________________________
2. Journalize the entry to record the sale, assumingdouble-declining balance method is used. If an amount box does notrequire an entry, leave it blank.
Cash __________ _______________
Accumulated Depreciation __________ _______________
Equipment __________ _______________
Gain On sale of equipment __________ _______________
3. Journalize the entry to record the sale, assuming that theequipment was sold for $110,000 instead of $128,100. If an amountbox does not require an entry, leave it blank.
Cash __________ _______________
Accumulated Depreciation __________ _______________
loss On sale of equipment __________ _______________
Equipment __________ _______________
