You are the controller for ABC Corp. ABC has computer equipment that was purchas

Question

You are the controller for ABC Corp. ABC has computer equipment that was purchased several year ago for a large sum of money. The lead engineer has said that the computer equipment is outdated and needs to be replaced. There is still a substantial amount of adjusted basis remaining on the equipment. The lead engineer has said that the computer system can be sold for $1,000 or it can be abandoned. As the controller of the corporation, the President has asked you your opinion on what ABC should do. Should ABC sell the equipment for $1,000 or write the equipment off as a loss from abandonment? (Think of what type of loss would be generated by either scenarios)

What type of property is the computer equipment?
What do you think and why?

Explanation / Answer

Ans. Computer equipment:- computer is coming under fixed assets because its life more than 1 years it will be providing future benefit. it will full-fill property plant equipment defination.

Company should sell the equipment for $1000 Instead of write-off, because if we write-off we will get only tax benefit and if sell the equipment for $1000 we will received benefit more than write-off.

So company should sell the equipment

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.