Foghorn Ltd. has an asset with an original cost of $16,000 and a carrying amount (net book value) today of $4,400. The Company no longer needs the asset and has decided to sell it today for $3,000 cash. The journal entry Foghorn will use to record the sale includes:
A) a credit to the asset account for $4,400.
B) a debit to the asset account for $4,400.
C) a debit to accumulated amortization for $11,600.
D) a credit to cash account for $3,000.

Question

Quizplus · Accepted Answer

The accumulated amortization is the difference between the original cost and the carrying amount, which is $16,000 - $4,400 = $11,600. This amount is debited to remove it from the books.