Wilson Engineering purchased a depreciable asset costing $45,000 on January 1,Year 1.The asset is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years.Straight-line depreciation is used.If the asset is sold on July 1,Year 5 for $20,000,the journal entry to record the sale will include:

Question

Quizplus · Accepted Answer

The accumulated depreciation by July 1, Year 5 is $22,500. This is calculated as $5,000 per year for 4.5 years (since the asset was used for 4 full years and 6 months). Therefore, the journal entry will include a debit to accumulated depreciation for $22,500.

Wilson Engineering Purchased a Depreciable Asset Costing $45,000 on January