On May 31, 2015, K. Graf Company sold a piece of machinery it purchased on Janua

Question

On May 31, 2015, K. Graf Company sold a piece of machinery it purchased on January 1, 2008, with an original cost of $287,400. The asset had a useful life of 14 years and a scrap value of $69,000. t sold the asset for $258,000 in cash. Graf recorded depreciation through December 31, 2014, using the straight-line method. What was the carrying value of the asset on the date of sale? What is the gain or loss on disposal? Record the jounal entry for the sale. Determine the carrying value of the asset on the date of sale. The carrying value of the asset on the date of sale is S Identify the gain or loss on disposal of the asset. The Record the journal entry for the sale. (Record debits first, then credits. Exdude explanations from any joumal entries.) on the disposal of the asset is $ Account May 31, 2015

Explanation / Answer

Depreciation per year 15600 (287400-69000)/14 Depreciation for 7 years 109200 Depreciation for 5 months 6500 15600*(5/12) Total accumulated Depreciation upto date of sale 115700 The carrying value of the asset on the date of sale = 171700 (287400-115700) The gain on the disposal of the machine is 86300 Account Debit Credit Depreciation expense 6500 Accumulated Depreciation - Machine 6500 (To record depreciation upto date of sale from 1st jan, 2015) Cash 258000 Accumulated Depreciation - machine 115700 Machine 287400 Gain on sale of machine 86300

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