Question

Required information M9-10 Reporting and Recording the Disposal of a Long-Lived Asset (Straight-Line Depreciation) (LO 9-5) [The following information applies to the questions displayed below) As part of a major renovation at the beginning of the year, Atiase Pharmaceuticals, Inc. sold shelving units (recorded as Equipment) that were 10 years old for $1,100 cash. The shelves originally cost $7600 and had been depreciated on a straight-line basis over an estimated useful life of 10 years with an estimated residual value of $600. __ M9-10 Part 1 1. Complete the table below, indicating the account, amount, and direction of the effect on disposal. Assume that depreciation has been recorded to the date of sale. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign. Do not round Intermediate calculations.) Assets Liabilities

Answer 1

Solution

Atiase Pharmaceuticals

1. Table showing the Effect of disposal:

Assets		=	Liabilities		+	Stockholders' Equity
Cash	$1,100
Equipment	($7,600)					Equity	$500
Accumulated Depreciation - Equipment	$7,000

2. Entry to record sale of shelf units for $1,100:

Transaction	Account Titles and Explanation	Debit	Credit
1	Cash	$1,100
	Accumulated Depreciation – Equipment	$7,000
	Equipment		$7,600
	Gain on Sale of Equipment		$500
	(To record sale of equipment and the resulting gain)