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Chapter 8 Ex -6

Chapter 8 Ex -6 - Depreciation for 2005 and 2006—($9,000...

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LO 8 EXERCISE 8-6 ASSET DISPOSAL 1. July 1 Depreciation Expense 4,500 Accumulated Depreciation—Asset 4,500 To record depreciation of asset. ($60,000 – $6,000)/6 years = $9,000 per year. $9,000 × 6/12 = $4,500. Assets = Liabilities + Owners’ Equity –4,500 –4,500 July 1 Cash 40,000 Accumulated Depreciation—Asset 22,500* Asset 60,000 Gain on Sale of Asset 2,500** To record sale of the asset. Assets = Liabilities + Owners’ Equity +40,000 +2,500 +22,500 –60,000 *Accumulated depreciation at time of sale:
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Unformatted text preview: Depreciation for 2005 and 2006—($9,000 × 2) $18,000 Depreciation for 2007 4,500 Total $22,500 **Gain on sale is calculated as follows: Asset cost $60,000 Less: Accumulated depreciation 22,500 Book value $37,500 Sale price 40,000 Gain on sale $ 2,500 2. The gain or loss should appear in the Other Income category of the income state-ment to indicate that it is not part of the normal operating activity of the company. 8-1...
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