{"id":38376,"date":"2024-07-30T11:51:32","date_gmt":"2024-07-30T11:51:32","guid":{"rendered":"https:\/\/www.greatassignmenthelp.com\/questions\/?p=38376"},"modified":"2024-07-30T11:51:32","modified_gmt":"2024-07-30T11:51:32","slug":"a-company-bought-a-computer-for-1500-three-years-later-the-computer-was-sold-for-300","status":"publish","type":"post","link":"https:\/\/www.greatassignmenthelp.com\/questions\/a-company-bought-a-computer-for-1500-three-years-later-the-computer-was-sold-for-300\/","title":{"rendered":"A company bought a computer for $ 1,500. Three years later, the computer was sold for $300"},"content":{"rendered":"

A company bought a computer for $ 1,500. Three years later, the computer was sold for $300. Assuming a 5-year estimated service life and straight-line depreciation, which account(s) would be used to record the disposal of the assets? Select all that apply.<\/p>\n

A.<\/strong> Gain\/loss on sale of asset<\/p>\n

B.<\/strong>\u00a0Sales Income<\/p>\n

C.<\/strong> Depreciation Expense<\/p>\n

D.<\/strong>\u00a0Fixed Assets<\/p>\n

E.<\/strong> Accumulated depreciation<\/p>\n

Answer: The correct options are A, D and E.<\/strong><\/p>\n

To explain the above, one has to recall the situation and measures taken in the field of accounting. Other time a business person sells or otherwise dispose of fixed assets for instance a computer and the transaction needs to be recorded. This involves the elimination of the account of the asset from the balance sheet and the effect could be the selling price of an asset on a profit or loss account.<\/p>\n

<\/a> However, before working on the process, there exists an essential parameter regarding the estimated book value of the asset at the time of sale. The initial purchase price is $1,500 and it has a useful life of 5 years by following the straight-line dehydration. Yearly write-off is $300 provided after setting aside $1,500 in five years. Consequently, the total depreciation on machinery for the three years is $ 900, obtained by multiplying $ 300 by three. The book value is hence $ 600 ($ 1500-$ 900). Thus, since the computer was sold for $300, the loss is equal to $300 or the difference between the cost of $600 goods and the $300. For this disposal, it is deemed most appropriate to use the account Fixed Assets account (referred to as option D), whereby debiting in a value of $1500, that was initially spent. Since we need to take out the $900 of accumulated depreciation we use an account which is option E. The Accumulated depreciation account that we cross off from the equipment account. It is under accounts; Gain\/Loss on Sale of Asset account that the $300 loss recorded is under option A. A similar journal entry would be Entry Description: This would help to decrease the value of account Cash by $ 300, decrease the value of the account Accumulated Depreciation by $ 900, increase the account Fixed Assets by $ 1500 and increase the account loss on sale of the asset by $ 300. Thus, the asset along with the related depreciation amount is deleted from the balance sheet.<\/p>\n","protected":false},"excerpt":{"rendered":"

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