On January 1, 2018, Salt Company purchased equipment for $32,000. Salt uses straight-line depreciation and estimates a five-year useful life and a $2,000 salvage value. On December 31, 2022, the equipment was stolen.
Assuming the equipment was not insured against theft, the journal entry to record the theft should reflect:

Question

Quizplus · Accepted Answer

($32,000 - $2,000) / 5 = $6,000 annual depreciation
$32,000 - (5 x $6,000) = $2,000 book value at date of theft = $2,000 theft loss

On January 1, 2018, Salt Company Purchased Equipment for $32,000