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27 January, 13:16

Equipment that cost $210,000 and on which $100,000 of accumulated depreciation has been recorded was disposed of for $92,000 cash. The entry to record this event would include a A. loss of $20,000. B. gain of $20,000. C. cannot be determined. D. loss of $18,000.

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  1. 27 January, 13:32
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    loss of $18,000.

    Explanation:

    Disposal of asset occurs when the asset is sold. Fixed asset carry a cost and accumulated depreciation for life from purchase to the disposal date. At the time of disposal there might be a gain or loss on disposal. If the asset is sold below the NBV there is a loss on disposal and If the asset is sold over the NBV there is a profit on disposal

    Net Value of Asset = Cost - Accumulated Depreciation

    Net Value of Asset = $210,000 - $100,000 = $110,000

    Net profit / loss on disposal = Cash Proceeds - Net book value

    Net profit / loss on disposal = $92,000 - $110,000

    Net loss on disposal = $18,000
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