Lease term is 75 or more of the assets expected

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: year of depreciation to consider? What year is the problem asking about? Do you need to do more than one step to solve the problem? Depreciable cost = Cost – residual value Net book value of an asset = Cost – Accumulated depreciation Recording the sale (disposal) of an asset o Record any necessary depreciation expense for the period to get the current accumulated depreciation balance (i.e., update the accumulated depreciation account!) o Write off the accumulated depreciation balance (i.e. debit the accumulated depreciation account so that the balance is zero) o Write off the cost of the asset (i.e. credit the asset account for the purchase price/initial cost of the asset) o Record the cash received from the sale o The difference between cash received and the net book value will be the gain or loss on the sale – remember debits = credits!! If the balancing entry needs to be a debit then this represents a loss (cash received < net book value). If the balancing entry needs to be a credit then this...
View Full Document

This document was uploaded on 02/09/2014.

Ask a homework question - tutors are online