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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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How is the sale of equipment at an amount greater than its book value recorded? How would your answer change if the equipment is sold at an amount less than its book value?

To determine

Sale of equipment:

The sale of equipment is disposing off the machine from the business after taking its full use i.e. after its expiry of life.

Book value:

The value of asset which is computed by subtracting the cost of asset with the accumulated depreciation.

The treatment of recording sale when the sale amount is recorded greater than its book value and when the sale amount is lower than its book value.

Explanation

The treatment of recording the sale of equipment is as follows:

When the sale amount is greater than its book value i.e. greater than the value which is computed by subtracting the cost with accumulated depreciation then it will be considered as gain from the sale of the equipment...

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