A truck that cost $63,000 and on which $30,000 of accumulated depreciation has been recorded was disposed of for $27,000 cash. The entry to record this event would include a

Question

Quizplus · Accepted Answer

When an asset is disposed of, the difference between the amount received from its disposal (in this case, $27,000) and its book value (cost - accumulated depreciation, in this case, $63,000 - $30,000 = $33,000) is either a gain or a loss. Since the amount received is less than the book value, there is a loss of $6,000 ($27,000 - $33,000 = -$6,000). The entry to record this event would be:
Debit Cash $27,000
Debit Accumulated Depreciation $30,000
Credit Truck $63,000
Credit Loss on Disposal of Truck $6,000
The credit to the Truck account is for its book value, while the credit to Accumulated Depreciation represents the total amount of depreciation that had been recorded up to the date of disposal.

A Truck That Cost $63,000 and on Which $30,000 of Accumulated