Question

E8-17 LO8-5 Recording the Disposal of an Asset at Three Different Sale Prices Marriott International is a worldwide operator, franchisor, and licensor of hotels, residential, and time share properties totaling nearly $1.8 billion in net property and equipment. Assume that Marriott replaced furniture that had been used in the business for five years. The records of the company reflected the follow ing regarding the sale of the existing furniture: Furniture (cost) Accumulated depreciation $8,000,000 7.700,000 Required: 1. Give the journal entry for the disposal of the furniture, assuming that it was sold for a. $300,000 cash b. $900,000 cash C $100,000 cash 2. Based on the three preceding situations, explain the effects of the disposal of an asset.

Answer 1

Marriott international
Cash	300000
Accumulated Depreciation	7700000
Furniture		8000000
Cash	900000
Accumulated Depreciation	7700000
Gain on disposal of furniture		600000
Furniture		8000000
Cash	100000
Accumulated Depreciation	7700000
Loss on disposal of furniture	200000
Furniture		8000000
Req. 2
Effects of the disposal of an asset:-
Asset account will be closed which is disposed by crediting the asset and debiting the accumulated dep.
Sale proceeds will be received so cash account will be debited.
If there is some difference, then that diff. will be shown as loss ( debit ) or gain ( credit )