Asked by Ryan Matthew McCarthy on Jun 05, 2024
Verified
Lue Company sold used equipment for $450,000 cash.The equipment was purchased 5 years ago for a cost of $800,000.It has been depreciated using the straight-line method over an estimated useful life of 10 years with an estimated residual value of $50,000.
Prepare the journal entry at the end of year five for the asset's disposal assuming the fifth year's depreciation had been recorded.
Straight-Line Method
A depreciation approach assigning a consistent depreciation expense amount to an asset throughout its operational lifespan.
Estimated Residual Value
The anticipated market value of an asset at the end of its useful life.
Depreciated
Refers to the reduction in the recorded cost of a fixed asset in a systematic manner over its useful life.
- Provide an account of how to manage the sale or disposal of assets that depreciate over time, including the computation of any gains or losses incurred.
Verified Answer
JV
![*[($800,000 - $50,000)÷ 10] × 5](https://d2lvgg3v3hfg70.cloudfront.net/TB7518/11eac031_9f29_5d31_a79a_cfdac5363b4c_TB7518_00.jpg)
*[($800,000 - $50,000)÷ 10] × 5
Learning Objectives
- Provide an account of how to manage the sale or disposal of assets that depreciate over time, including the computation of any gains or losses incurred.