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4 October, 04:04

On June 30, 2015, Adilide Inc. discarded equipment costing $40,000. Accumulated Depreciation as of December 31, 2014, was $25,000. Assume annual depreciation on the equipment is $2,500.

Journalize the partial year depreciation expense and disposal of the equipment.

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  1. 4 October, 04:24
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    1. Journalize the partial year depreciation expense:

    Debit Depreciation expense $1,250

    Credit Accumulated depreciation account $1,250

    2. The entry recording disposal of the equipment:

    Debit Accumulated depreciation account $26,250

    Debit Loss on asset disposal $13,750

    Credit Equipment asset $40,000

    Explanation:

    Annual depreciation on the equipment is $2,500

    Depreciation expense for 2015 = $2,500/2 = $1,250

    The entry:

    Debit Depreciation expense $1,250

    Credit Accumulated depreciation account $1,250

    On June 30, 2015, Accumulated Depreciation = $25,000 + $1,250 = $26,250

    The Book value of the asset = $40,000 - $26,250 = $13,750

    The entry recording disposal of the equipment:

    Debit Accumulated depreciation account $26,250

    Debit Loss on asset disposal $13,750

    Credit Equipment asset $40,000
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