Question

Computing and Recording Proceeds from the Sale of PPE

The following information was provided in the 2018 10-K of Hilton Worldwide Holdings, Inc.

Note 7: Property and Equipment ($ millions) 2018 2017

Property and equipment gross $848 $803

Accumulated depreciation (481) (450)

Property and equipment, net 367 353

Note 7 also revealed that depreciation expense on property and equipment totaled $54 million in 2018. The cash flow statement reported that expenditures for property and equipment totaled $72 million in 2018 and that there was no gain or loss on the sale of property and equipment during the year.

Using the information provided , prepare a journal entry to record the sale of property and equipment in 2018. Explain how a gain or loss on the sale would have changed the journal entry you recorded.

Please show all calculations and steps.

Answer 1

Cost of property & Equipment Sold in 2018	27	$ Millions	=803+72-848
Depreciation on Property & Equipment Sold in 2018	23	$ Millions	=450+54-481
		$ Millions
Account Titles & Explanations	Debit	Credit
Cash ( 27 - 23 )	4
Accumulated Depreciation	23
Property & Equipment		27

If there would be any gain then it will result in increase in cash by the amount of gain , Similarly if there would be any loss then it will result in decrease in cash by the amount of loss.