For Each of the Following Independent Situations Determine the Gain

question 1

Essay

For each of the following independent situations determine the gain or loss on the sale or disposal of the asset.Prepare the journal entry required at the time of sale or disposal.Assume that all of the assets are amortized using the straight-line method and that a half-year's depreciation was taken in the year the asset was acquired.
A) Equipment purchased April 15, 2010, for $75,000 was sold for $9,500 on June 30, 2015.At the time of purchase it was estimated to have a $5,000 residual value and a 5-year useful life.
B) Recording equipment was purchased on July 1, 2012, for $120,000.At that time it was estimated to have a
6-year useful life and no residual value.On September 30, 2013, there was a fire in the recording studio, and the equipment suffered water damage and is beyond repair.The company received $60,000 from the insurance company for the equipment.
C) Office furniture was purchased on February 11, 2001 for $50,000 and was estimated to have a useful life of
20 years and a salvage value of $5,000.On April 1, 2014, the company moved to new offices and donated the old furniture to charity.

• A) Equipment purchased April 15, 2010, for $75,000 was sold for $9,500 on June 30, 2015.At the time of purchase it was estimated to have a $5,000 residual value and a 5-year useful life.
• B) Recording equipment was purchased on July 1, 2012, for $120,000.At that time it was estimated to have a
• 6-year useful life and no residual value.On September 30, 2013, there was a fire in the recording studio, and the equipment suffered water damage and is beyond repair.The company received $60,000 from the insurance company for the equipment.
• C) Office furniture was purchased on February 11, 2001 for $50,000 and was estimated to have a useful life of
• 20 years and a salvage value of $5,000.On April 1, 2014, the company moved to new offices and donated the old furniture to charity.

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