HW7 Solutions - E814 Req 1a Cash A 300,000 Accumulated...

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E8–14. Req. 1a Cash (+A) .............................................................................. 300,000 Accumulated depreciation ( XA, +A) .................................... 7,700,000 Furniture ( A) .................................................................... 8,000,000 Sale of an asset at book value; the result is no loss or gain. Req. 1b Cash (+A) ............................................................................ 900,000 Accumulated depreciation ( XA, +A) .................................. 7,700,000 Gain on sale of long-lived asset (+Gain, +SE) ................. 600,000 Furniture ( A) .................................................................. 8,000,000 Sale of an asset above book value; the result is a gain. Req. 1c Cash (+A) .............................................................................. 100,000 Accumulated depreciation ( XA, +A) .................................... 7,700,000 Loss on sale of long-lived asset (+Loss, SE) ...................... 200,000 Furniture ( A) .................................................................... 8,000,000 Sale of an asset below book value; the result is a loss. Req. 2 Summarization of the effects of the disposal: 1. The loss or gain on disposal of a long-lived asset is the difference between the disposal price and the book value at date of disposal. 2. When the disposal price is the same as the book value there is no loss or gain; when the price is above book value there is a gain; and when the price is below book value, there is a loss on disposal. 3. The book value does not purport to be market value, so a loss or gain on disposal of a long-lived asset normally would occur.
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