Martinez owns machinery that cost $87,000 with accumulated depreciation of $40,000. the company sells the machinery for cash of $42,000. the journal entry to record the sale would include:

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Business

Justice Kirby

25 January, 09:58

Martinez owns machinery that cost $87,000 with accumulated depreciation of $40,000. the company sells the machinery for cash of $42,000. the journal entry to record the sale would include:

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Misael Irwin · Answer 1

The overall concept for the accounting for asset disposals is to reverse both the recorded cost of the asset and the reciprocal amount of accumulated depreciation. Any remaining difference between the two is recognized as either a gain or a loss. The gain or loss is calculated as the net disposal proceeds, minus the asset’s carrying value.

The journal entries are:

debit

Cash 42,0000

Accumulated Depreciation 40,000

Loss on Asset Disposal 5,000

credit

Machinery 87,000