Question

A company sells a plant asset which originally cost $373000 for $111000 on December 31, 2021. The Accumulated Depreciation account had a balance of $149000 after the current year's depreciation of $40000 had been recorded. The company should recognize a $113000 loss on disposal. $73000 loss on disposal. $113000 gain on disposal. $262000 loss on disposal.

Answer 1

The Accumulated depreciation account had a balance of $144000

What is Accumulated depreciation?

Accumulated depreciation is the total amount of a company's asset depreciation, whereas depreciation expense is the amount depreciated for a single period. Depreciation is an accounting entry that represents the decrease in the cost of an asset over its useful life.

Accumulated depreciation is the total amount of depreciation that has been expensed against the asset's value. On the balance sheet, fixed assets are recorded as a debit, while accumulated depreciation is recorded as a credit, offsetting the asset.

Accumulated depreciation accounts are credit-balanced asset accounts (known as a contra asset account). It is classified as a contra asset account because it has a negative balance that is intended to offset the asset account with which it is paired, resulting in a negative balance.

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