Sale of Equipment Equipment was acquired at the beginning of the year at a cost...
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Accounting
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?
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