Touch Tronix Company has a piece of manufacturing equipment that has become obsolete.On December 21, 2011, the company discards the equipment which has a historical cost of $500,000 and accumulated depreciation of $460,000.What is the net impact on the long-term assets of Touch Tronix Company on its December 31, 2011 statement of financial position?

Question

Quizplus · Accepted Answer

When the company discards the manufacturing equipment, there is a decrease in the long-term assets. The accumulated depreciation of $460,000 reduces the historical cost of $500,000 to a net book value of $40,000. Therefore, discarding the equipment results in a decrease of $40,000 in the long-term assets.

Touch Tronix Company Has a Piece of Manufacturing Equipment That