prepare the journal entry In May 2017, Holiday announced the closing of its Fina
ID: 2598687 • Letter: P
Question
prepare the journal entry
In May 2017, Holiday announced the closing of its Financial Division, a decision that qualified for accounting as a discontinued operation. The Financial Division was officially closed on September 15, 2017. The equipment was disposed of on November 1, 2017 however the building will not be sold until 2018 and meets the requirements for a "held for sale" asset. Additional information related to the Financial Division is as follows: 1. January 1- May 1May 1- September Revenues Expenses $1,542,000 $1,457.000 15 $654,000 $826,000 January 1 Book Value $967,000 $3,150,000 Depreciation 2017 Selling Price $53,000 $278,000 $712,000 $3,732,000 Equipment Building Accumulated Depreciation on the Equipment prior to 2017 was $242,000, on the building accumulated depreciation prior to 2017 was $516,000. The revenues and expenses related to the Financial Division are included in the revenues and expenses on the trial balance. All depreciation was properly recorded for the building and equipment of the Financial Division. The disposal of the equipment and building have not been recorded.Explanation / Answer
Original cost of Equipment = Book value on January 1 + Accumulated Depreciation prior to 2017
= $967,000+$242,000
= $1,209,000
Original cost of Building = Book value on January 1 + Accumulated Depreciation prior to 2017
= $3,150,000+$516,000
= $3,666,000
Loss on disposal of equipment = Carrying value on the date of disposal-sale proceeds
= (967000-53000)-712000
= 914000-712000
= $202,000
Gain on disposal of building = Sale proceeds-Carrying value on the date of disposal
= 3732000-(3150000-278000)
= 3732000-2872000
= $860,000
Journal entry for disposal of equipment
Accumulated Depreciation $295,000
Sale Proceeds $712,000
Loss on disposal of equipment $202,000
Cost-equipment $1,209,000
Journal entry for disposal of Building
Accumulated Depreciation $794,000
Sale Proceeds $3,732,000
Cost-building $3,666,000
Gain on disposal of building $860,000
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