What Is the Journal Entry to Record the Disposal of the Asset

question 82

Multiple Choice

What is the journal entry to record the disposal of the asset?

• A) Debit Cash and credit Gain on Disposal for $95,000
• B) Debit Cash for $450,000, debit Accumulated Depreciation for $545,000, credit Gain on Disposal for $95,000, and credit Equipment for $900,000
• C) Debit Cash and credit Equipment for $545,000
• D) Debit Cash for $545,000, debit Accumulated Depreciation for $260,000, debit Loss on Disposal for $95,000, and credit Equipment for $900,000

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Definitions:

Net Present Value

A financial metric that calculates the current value of all future cash flows generated by a project, minus the initial investment cost.

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.

Net Present Value

This is the calculation used to find the present value of cash flows from an investment, adjusted for time and interest, to determine profitability.

Initial Investment

The initial amount of money spent to purchase an asset, start a project, or launch a business venture, serving as a baseline for measuring future returns.