Chapter 11, Problem 11.6BE

To determine

Asset: Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue.

Disposal of assets:

Disposal is an activity of selling the worn-out assets that is no longer in need for the business, in return of some consideration. Disposal may be made in any of the following situations:

• Disposal with no gain no loss: When the asset is disposed with no consideration received.
• Disposal with gain: When the asset is disposed for more than its book value (original cost less accumulated depreciation).
• Disposal with loss: When the asset is disposed for less than its book value.

To Prepare: The journal entries to record the sales of the patent and equipment.