When a company sells equipment for cash on a date other than the last day of the accounting period,it must:
A)record Depreciation Expense for the entire accounting period during which the equipment is sold.
B)record the disposal by reducing the Equipment account and increasing a revenue account;a gain or loss is reported if the decrease and increase are not equal.
C)first record Depreciation Expense for the period up to the date of sale,and then record the disposal by increasing Cash and decreasing both Equipment and Accumulated Depreciation;a gain or loss is reported if the proceeds from the sale do not equal the asset's book value.
D)record Accumulated Depreciation for the entire current accounting period.

Question

Quizplus · Accepted Answer

The disposal of a depreciable asset usually requires two accounting adjustments.First,the Depreciation Expense and Accumulated Depreciation accounts must be updated.If a long-lived asset is disposed of during the year,it should be depreciated to the date of disposal using a partial-year calculation.Then,the company records the disposal by increasing Cash and decreasing both Equipment and Accumulated Depreciation;a gain or loss is reported if the proceeds from the sale do not equal the asset's book value.

When a Company Sells Equipment for Cash on a Date