Account for the disposal of long-term assets.

Account for the disposal of long-term assets.

 

1. Sale of long-term assets
   1. Update depreciation for partial year, if necessary
   2. Calculate book value
   3. Compare to sale amount
   4. If we dispose of an asset for more than book value, we record a _____
   5. If we dispose of an asset for less than book value, we record a ________

 

Practice:  Strawberry Fields purchased a tractor at a cost of $38,000 and sold it two years later for $25,000. Strawberry Fields recorded depreciation using the straight-line method, a five-year service life, and an $8,000 residual value. What was the gain or loss on the sale? Record the sale.

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