Answer:
Dr. Cash $20,500
Dr. Accumulated Depreciation $5,700
Dr. Loss on disposal $2.300
Cr. Cost $28,500
Explanation:
The assets is sold for $20,500, which have cost of $28,500 and accumulated depreciation of $5,700. At the time of disposal $20,500 cash is received which is debited in the cash account. Accumulated Depreciation and cost is adjusted against it. The loss of $2,300 is incurred on the disposal of equipment.
Answer:
To record the disposal,
Debit Disposal/Other income account $22,800
Credit Fixed Asset account $22,800
Being entries to derecognize equipment disposed
Debit Cash account $20,500
Credit Disposal/Other Income account $20,500
Being entries to record the sales proceed on disposal of equipment
Explanation:
The carrying amount or net book value of an asset is the difference betwen the historical cost of the asset and the accumulated depreciation. When an asset is disposed, this carrying amount has to be derecognized and the proceed from the sale recognized. The difference between these two amounts is the gain/loss on disposal.
Net book value of asset
= $28,500 - $5,700
= $22,800
Sales proceed = $20,500
