Accounting for Disposals of Plant Assets

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When an asset is discarded, and the cash received is less than the book value, what should be recorded?

No entry

The book value as revenue

A gain

A loss (correct)

When an asset is discarded, and the cash received is greater than the book value, what should be recorded?

No entry

A loss

A gain (correct)

The book value as revenue

When an asset is fully depreciated and then discarded, what should be the journal entry?

Debit Cash, Credit Asset Cost

Debit Accumulated Depreciation, Credit Asset Cost

No entry is required (correct)

Debit Asset Cost, Credit Accumulated Depreciation

If an asset costing $8,000 with accumulated depreciation of $6,000 is discarded, what is the book value of the asset?

$2,000 Signup and view all the answers

What is the correct journal entry when an asset is sold for less than its book value?

Debit Cash, Credit Asset Cost, Credit Accumulated Depreciation, Debit Loss on Disposal Signup and view all the answers

What is the book value of the equipment at the time of sale on 3/31?

$4,000 Signup and view all the answers

How much gain or loss is recorded when the equipment is sold for $7,000 cash?

$4,000 gain Signup and view all the answers

How much depreciation expense should be recorded for the equipment up to 3/31?

$4,000 Signup and view all the answers

If the equipment is sold for $3,000 cash, what is the gain or loss recorded?

$0 (no gain or loss) Signup and view all the answers

What is the book value of the equipment at the time of sale on 3/31 if it was originally purchased for $16,000 and has $12,000 in accumulated depreciation at the prior year-end?

$4,000 Signup and view all the answers

If the equipment is sold for $7,000 cash, and has a book value of $3,000, what is the appropriate accounting treatment?

Record a $4,000 gain on sale Signup and view all the answers

If a company purchases a mineral deposit with an estimated 300,000 tons of available ore for $900,000 and expects zero salvage value, what would be the depletion charge per ton?

$3 Signup and view all the answers

If a company sells a plant asset for $4,000 that originally cost $6,000 and had accumulated depreciation of $3,000, what should be recorded?

A loss of $2,000 Signup and view all the answers

Which of the following is an example of a natural resource asset?

Gold Signup and view all the answers

If a company mines and sells 75,000 tons of ore from a mineral deposit with an estimated 250,000 tons of available ore that was purchased for $500,000, what would be the depletion expense for the year?

$150,000 Signup and view all the answers

How should natural resource assets be reported on the balance sheet?

At cost less accumulated depletion Signup and view all the answers

If a company sells a plant asset for $1,500 that originally cost $2,000 and had accumulated depreciation of $800, what should be recorded?

A gain of $300 Signup and view all the answers

Accounting for Disposals of Plant Assets

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Questions and Answers

When an asset is discarded, and the cash received is less than the book value, what should be recorded?

When an asset is discarded, and the cash received is greater than the book value, what should be recorded?

When an asset is fully depreciated and then discarded, what should be the journal entry?

If an asset costing $8,000 with accumulated depreciation of $6,000 is discarded, what is the book value of the asset?

What is the correct journal entry when an asset is sold for less than its book value?

What is the book value of the equipment at the time of sale on 3/31?

How much gain or loss is recorded when the equipment is sold for $7,000 cash?

How much depreciation expense should be recorded for the equipment up to 3/31?

If the equipment is sold for $3,000 cash, what is the gain or loss recorded?

What is the book value of the equipment at the time of sale on 3/31 if it was originally purchased for $16,000 and has $12,000 in accumulated depreciation at the prior year-end?

If the equipment is sold for $7,000 cash, and has a book value of $3,000, what is the appropriate accounting treatment?

If a company purchases a mineral deposit with an estimated 300,000 tons of available ore for $900,000 and expects zero salvage value, what would be the depletion charge per ton?

If a company sells a plant asset for $4,000 that originally cost $6,000 and had accumulated depreciation of $3,000, what should be recorded?

Which of the following is an example of a natural resource asset?

If a company mines and sells 75,000 tons of ore from a mineral deposit with an estimated 250,000 tons of available ore that was purchased for $500,000, what would be the depletion expense for the year?

How should natural resource assets be reported on the balance sheet?

If a company sells a plant asset for $1,500 that originally cost $2,000 and had accumulated depreciation of $800, what should be recorded?

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