Question

Splish Ltd. owned several manufacturing facilities. On September 15 of the current year, Splish decided to sell one of its manufacturing buildings. The building had cost $9,310,000 when originally purchased 8 years ago, and had been depreciated using the straight-line method with no residual value. Splish estimated that the building had a 35-year life when purchased. Prepare the journal entry to record the sale of the building on Splish's books, assuming 8 years of depreciation has already been recorded in the accounts to the date of disposal. The building was sold for $7,282,000 cash. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Debit Credit Date Account Titles and Explanation Sept. 15

Answer 1

If equipment sold for $7,282,000:

Date	Account title and explanation	Debit	Credit
Sept.15	Cash	$7,282,000
	Accumulated depreciation	$2,128,000
	Building		$9,310,000
	Gain on sale of equipment		$100,000
	[To record sale of Building]

If equipment sold for $7,182,000:

Date	Account title and explanation	Debit	Credit
Sept.15	Cash	$7,182,000
	Accumulated depreciation	$2,128,000
	Building		$9,310,000
	[To record sale of Building]

If equipment sold for $7,072,000:

Date	Account title and explanation	Debit	Credit
Sept.15	Cash	$7,072,000
	Accumulated depreciation	$2,128,000
	Loss on sale of equipment	$110,000
	Building		$9,310,000
	[To record sale of Building]

Calculations:

Cost of Building	$9,310,000
Residual value	$0
Depreciable value	$9,310,000
÷ Useful life	35 years
= Depreciation expense per year	$266,000

Accumulated depreciation ($266,000 x 8 years) = $2,128,000