Touch Tronix Company has a piece of manufacturing equipment that has become obsolete. On December 21, 2014, the company discards the equipment which has a historical cost of $500,000 and accumulated depreciation of $440,000. What is the net impact on the long-term assets of Touch Tronix Company on its December 31, 2014 statement of financial position?

Question

Quizplus · Accepted Answer

When the company discards the equipment, they are essentially removing it from their long-term assets. The historical cost of the equipment ($500,000) and the accumulated depreciation ($440,000) are no longer relevant to the financial position of the company, as the equipment is no longer in use. However, the net impact on the long-term assets is only the difference between the historical cost and the accumulated depreciation, which is $60,000 ($500,000 - $440,000). Therefore, the correct answer is C.

Touch Tronix Company Has a Piece of Manufacturing Equipment That