Question

Due Mon 11/18/2019 5:00 pm Venkat Engineering decided to dispose of his old industrial evaporator and upgrade to a new model. He had purchased the old evaporator on January 1, 2012 for $13,700. There was no salvage/residual value and the useful life Venkat had used was 5 years. Venkat depreciated his machinery using a Straight Line basis. On December 31, 2016, Venkat talked Chris into paying him $600 for the above referenced equipment a) Calculate the Book Value at time of sale b) Calculate Venkat's gain or loss on this sale? Enter a loss as a negative value. c) Journalize this sale on Venkat's books on December 31, 2016. Description Debit Credit Date Dec 31

Answer 1

$ 13,700 $ 0 $ 13,700 cost of asset expected salvage value depreciable value life of asset (years) annual depreciation years for which depreciation expense has been recorded balance in the accumulated depreciation account on december 31, 2016 $ 2,740 january 1 2012 to december 31, 2016 $ 13,700 note - it is assumed that the depreciation expense for year ended december 31, 2016 has been recorded before recording the sale of the equipment $ 13,700 cost of asset balance in the accumulated depreciation account on december 31, 2016 book value at the time of sale $ 13,700 $0 gain on sale = sale value - book value gain on sale = $600 - $0 gain on sale = $ 600

(c) o date date description debit credit $ 600 $ 13,700 31-Dec Cash Accumulated Depreciation Equipment Gain On Sale Of Equipment (to record sale of equipment) $ 13,700 $ 600

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