91 Reporting and Recording the Disposal of a Long-Lived Asset (Straight-Line Depreciation) As part of a major renovation at the beginning of the year, Atiase Pharmaceuticals, Inc., sold shelving units (recorded as Equipment) that were 10 years old for $800 cash. The shelves originally cost $6,400 and had been depreciated on a straight-line basis over an estimated useful life of 10 years with an estimated residual value of $400. Assuming that depreciation has been recorded to the date of sale, show the effect of the disposal on the accounting equation. Prepare the journal entry to record the sale of the shelving units. LO 9-5 109.6

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Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
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91 Reporting and Recording the Disposal of a Long-Lived Asset (Straight-Line Depreciation)
As part of a major renovation at the beginning of the year, Atiase Pharmaceuticals, Inc., sold
shelving units (recorded as Equipment) that were 10 years old for $800 cash. The shelves
originally cost $6,400 and had been depreciated on a straight-line basis over an estimated useful
life of 10 years with an estimated residual value of $400. Assuming that depreciation has been
recorded to the date of sale, show the effect of the disposal on the accounting equation. Prepare the
journal entry to record the sale of the shelving units.
LO 9-5
109.6
Transcribed Image Text:91 Reporting and Recording the Disposal of a Long-Lived Asset (Straight-Line Depreciation) As part of a major renovation at the beginning of the year, Atiase Pharmaceuticals, Inc., sold shelving units (recorded as Equipment) that were 10 years old for $800 cash. The shelves originally cost $6,400 and had been depreciated on a straight-line basis over an estimated useful life of 10 years with an estimated residual value of $400. Assuming that depreciation has been recorded to the date of sale, show the effect of the disposal on the accounting equation. Prepare the journal entry to record the sale of the shelving units. LO 9-5 109.6
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The gain or loss on sale of a fixed asset is calculated as difference between the book value and sale price of the asset. The depreciation should be charged on the asset till date before estimation of loss or gain on the sale of the assets. 

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