Question

ABC Company sold a machine for $56,000 that originally cost $306,000. The balance of the Accumulated...

ABC Company sold a machine for $56,000 that originally cost $306,000. The balance of the Accumulated Depreciation account related to this equipment was $240,000. The entry to record the gain or loss on the disposal of this machine would include Select one:

a. A credit to loss in the amount off $10,000

b. A debit to loss in the amount of 10,000

c. A debit to gain in the amount of $10,000

d. A credit to gain in the amount of $10,000

Homework Answers

Answer #1

Gain or loss on assets will calculate by deducting book value of the assets from sales consideration. to calculate book value, we have to deduct accumulated depreciation from original cost of the assets.

Sale value $   56,000
Less: Book value of the assets
Cost of the assets $ 306,000
Less:Accumulated depreciation $ 240,000
Book value $   66,000
Loss on sale of asset $ (10,000)

in given case, entity has loss of $10,000 on sale. so loss account will debit. so answer will be:

b. A debit to loss in the amount of 10,000

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