The following entry was recorded by Woodrow Inc.: $$\begin{array} { | c | r | r | }
\hline \text { Cash } & 57,000 & \
\hline \text { Accumulated depreciation } & 33,000 & \
\hline \text { Loss on disposal of property, plant and equipment (PPE) } & 10,000 & \
\hline \text { PPE } & & 100,000 \
\hline
\end{array}$$ What is the effect on Woodrow's financial statements?

Question

The following entry was recorded by Woodrow Inc.: $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 57,000 & \
\hline \text { Accumulated depreciation } & 33,000 & \
\hline \text { Loss on disposal of property, plant and equipment (PPE) } & 10,000 & \
\hline \text { PPE } & & 100,000 \
\hline
\end{array}$$ What is the effect on Woodrow's financial statements?

Quizplus · Accepted Answer

- The cash of $57,000 is recorded, but it does not affect net assets as it is an asset exchange transaction that does not increase or decrease total assets.
- The accumulated depreciation of $33,000 reduces the value of property, plant, and equipment but does not affect net assets as the reduction is already reflected in the value of PPE.
- The loss on disposal of PPE of $10,000 reduces net income and retained earnings
- The PPE of $100,000 increases total assets but does not affect net assets as there is no corresponding increase in liabilities or equity.

The Following Entry Was Recorded by Woodrow Inc What Is the Effect on Woodrow's Financial Statements? A)A Cash

The Following Entry Was Recorded by Woodrow Inc What Is the Effect on Woodrow's Financial Statements?
A)A Cash