A Company Purchased a Computer System on January 2,2018 for $1,600,000.The

question 85

Multiple Choice

A company purchased a computer system on January 2,2018 for $1,600,000.The company used the straight-line depreciation method with an estimated useful life of 6 years and a residual value of $130,000.The company prepares financial statements at December 31. Assume the company decides to sell the computer system on July 1,2020 for $1,000,000.Which of the following statements about the journal entry (or entries) required on July 1 is not correct?

• A)The depreciation expense must be recorded for 6 months,January 1 to July 1.
• B)The Equipment asset account must be credited for $1,600,000 to record the sale.
• C)Accumulated Depreciation is debited for $612,500 in the entry to record the sale.
• D)The loss on the sale is $12,500.