Answer:
Dr Computer $3,300
Dr Accumulated depreciation-Truck $18,000
Cr Truck - Fixed Asset $20,000
Cr Gain on disposal of truck (Balancing Figure) $800
Cr Cash Account $500
Explanation:
The disposal of a Fixed asset is a three step procedure and is given as under:
- Remove the Accumulated depreciation and the cost of the fixed asset
- Record the receipt of the consideration at Fair Value
- Record the payment or receipt of the cash
Always remember that the balancing figure will go to Profit and loss statement.
<u>Step1: Remove the Accumulated depreciation and the cost of the fixed asset</u>
The asset value and the accumulated depreciation would be removed from the books of accounts and the balance figure would be transfered to profit and loss account.
Dr Accumulated Depreciation $18,000
Dr Profit & Loss Account $2,000
Cr Truck - Fixed Asset $20,000
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<u>Step2: Record the receipt of the consideration at Fair Value</u>
Dr Computer - Fixed Asset $3,300
Cr Profit and Loss Account $3,300
<u>Step3: Record the payment or receipt of the cash</u>
The receipt of the payment will treated as:
Dr Profit and loss Account $500
Cr Cash Account $500
The aggregate Effect if I summarizee would be:
Dr Computer $3,300
Dr Accumulated depreciation-Truck $18,000
Cr Truck - Fixed Asset $20,000
Cr Gain on disposal of truck (Balancing Figure) $800
Cr Cash Account $500
