quipment with an estimated residual value at acquisition of $15,000 was sold on December 31, 2013, for $20,000 cash. The following data were available at the time of sale: Acquisition cost $100,000 Accumulated depreciation on December 31, 2013, after adjustment 85,000 When this transaction is recorded, it should include a a. Credit of $5,000 to the Gain on Disposal account. b. Credit of $20,000 to the Equipment account. c. Debit of $20,000 to the Accumulated Depreciation account. d. Debit of $80,000 to the Loss on Disposal account.
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.
quipment with an estimated residual value at acquisition of $15,000 was sold on December 31, 2013, for $20,000 cash. The following data were available at the time of sale:
| Acquisition cost |
$100,000
|
| Accumulated |
85,000
|
When this transaction is recorded, it should include a
| a. |
Credit of $5,000 to the Gain on Disposal account. |
|
| b. |
Credit of $20,000 to the Equipment account. |
|
| c. |
Debit of $20,000 to the Accumulated Depreciation account. |
|
| d. |
Debit of $80,000 to the Loss on Disposal account. |
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