Question

On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. Which of the following will be included in the entry to record the disposal?
a. Accumulated Depreciation, debit, $310,000
b. Gain on Disposal of Asset, credit, $50,000
c. Equipment, credit, $310,000
d. Loss on Disposal of Asset, debit, $260,000

Answer 1

Answer:

c. Equipment, credit, $310,000

Explanation:

Whenever an asset is sold, the whole asset will be excluded from the balance sheet because it is no longer part of the assets of the business, hence the balance sheets linked to that asset will be reversed.

In this scenario, the carrying cost of $310,000 will be reversed and $310,000 will be credited to equipment

And, The accumulated depreciation with a credit balance will now be reversed and the debit of accumulated depreciation = $260,000 should be included.

Hence, the option c is correct