Question

Required Information Problem 7-8B Record the disposal of equipment (LO7-6) The following information applies to the questions displayed below.] New Dell Is in the process of closing Its operations. It sold Its three-year-old ovens to Sicily Pizza for $316,400. The ovens originally cost $422.000, had an estimated service life of 10 years, had an estimated residual value of $27,000, and were depreciated using straight-line depreciation. Complete the requirements below for New Dell. Problem 7-8B Part 1 Requlred: 1. Calculate the balance In the accumulated depreciation account at the end of the third year. Accumulated depreciation

Answer 1

Depreciation = (Cost - Salvage value) /Useful life

= (422,000-27,000)/10 = 39,500 per year

A)

Accumulated Depreciation = 39,500*3 years

= 118,500

B)

Book value = 422,000 - 118,500

= 303,500

C)

Gain = 316,400 - 303,500

= 12,900 Gain

D)

Cash	316,400
Accumulated Depreciation - ovens	118,500
Gain on sale		12,900
Ovens		422,000