On July 1, 2018, Nanette Company purchased equipment for $216,000. Nanette uses straight-line depreciation and estimates a six-year useful life and a $36,000 salvage value. On December 31, 2021, the equipment is destroyed by fire. The equipment is not insured.
The journal entry to record the equipment's destruction should reflect:

Question

Quizplus · Accepted Answer

($216,000 - $36,000) / 6 = $30,000 annual depreciation
$216,000 - (3.5 x $60,000) = $111,000 book value at date of fire = $111,000 fire loss

On July 1, 2018, Nanette Company Purchased Equipment for $216,000