Answer:
Debit Asset disposal account (p/l) $33,000
Credit Fixed assets Account $33,000
Debit Accumulated depreciation $18,600
Credit Asset disposal account (p/l) $18,600
Debit Cash account $16,500
Credit Asset disposal account (p/l) $16,500
Explanation:
Asset purchase is recorded as, debit asset , credit cash. When uses, depreciation sets in. To account for depreciation, debit depreciation expense and credit accumulated depreciation. The difference between the accumulated depreciation and the historical cost gives the net book value or the carrying amount.
An asset that is sold must be derecognized from the books after the sale. This is done by crediting the historical cost and debiting the disposal account with the cost, debiting the accumulated depreciation and crediting disposal account with the accumulated depreciation balance at the time disposal.
The amount received from the disposal less the carrying amount gives the gain/loss on sale.
Depreciation = ($33,000 - $2000)/5
= $6200
Accumulated depreciation after 3 years = 3 × $6200
= $18,600
The net book value = $33000 - $18600
= $14,400
The gain/loss on disposal is the ending balance in the Asset disposal account (p/l).
To recognized the sale of the asset
Debit Asset disposal account (p/l) $33,000
Credit Fixed assets Account $33,000
Debit Accumulated depreciation $18,600
Credit Asset disposal account (p/l) $18,600
Debit Cash account $16,500
Credit Asset disposal account (p/l) $16,500
