On July 1, 2021, Hale Kennels sells equipment for $222000. The equipment originally cost $594000, had an estimated 5-year life and an expected salvage value of $109000. The accumulated depreciation account had a balance of $342000 on January 1, 2021, using the straight-line method. The gain or loss on disposal is $18500 loss. $30000 loss. $18500 gain. $30000 gain
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.
On July 1, 2021, Hale Kennels sells equipment for $222000. The equipment originally cost $594000, had an estimated 5-year life and an expected salvage value of $109000. The
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