A company sells a piece of equipment half-way through the accounting period.The straight-line rate of depreciation on the equipment is $40,000 a year.Before recording the asset sale,the company should debit:
A)depreciation expense for $40,000 and credit long-lived assets for $40,000.
B)accumulated depreciation for $40,000 and credit cash for $40,000.
C)depreciation expense for $20,000 and credit accumulated depreciation for $20,000.
D)cash for $20,000 and credit depreciation expense for $20,000.

Question

Quizplus · Accepted Answer

Before a disposal is recorded,depreciation must be updated as of the sale.Half-year depreciation = $40,000 * .5 = $20,000.Depreciation expense is debited and Accumulated Depreciation is credited.

A Company Sells a Piece of Equipment Half-Way Through the Accounting