NOS Corp. purchased equipment for $180,000. They sold the equipment at the end of three years for $147,000. If the expected useful life of the equipment was ten years with a residual value of $30,000, and they use straight-line depreciation, which of the following is true regarding the journal entry to record the sale of the equipment? Select one: a. Credit Gain on Sale for $23,000 b. Credit Gain on Sale for $6,000 c. Credit Gain on Sale for $9,000 d. Credit Gain on Sale for $3,000 e. Credit Gain on Sale for $12,000
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
NOS Corp. purchased equipment for $180,000. They sold the equipment at the end of three years for $147,000. If the expected useful life of the equipment was ten years with a residual value of $30,000, and they use straight-line
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