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Unformatted text preview: Depreciation formula needs to be revised Disposal of Plant Assets When a company is finished using an asset, the asset can be: Discarded Sold Exchanged Before accounting for the disposal: Depreciation is updated Final book value is determined Discarding Plant Asset Accumulated depreciation and cost of asset removed from records Loss recorded (unless asset is fully depreciated and no residual value) E7-23 Book value at time of sale: Cost $ 8,700 Accumulated depreciation 2004 ($8,700 x 2/5) $ 3,480 2005 ($8700 - 3480) x 2/5 $ 2,088 January - September x 9 /12 $1,566 $5,046 Book value September 30 $3,654 Cash received $2,500 Loss on sale $1,154...
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