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Lease term is 75 or more of the assets expected

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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...
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