QQuestionAccounting
QuestionAccounting
A company bought a computer for $1,500. Three years later, the computer was sold for $300. Assuming a 5 -year estimated service life and straight line depreciation, which account(s) would be used to record the disposal of the asset? Select all that apply. Sales income Fixed assets Gain/loss on sale of asset Accumulated depreciation Depreciation expense Report Problem Don't worry, this won't interrupt your assessment Timm Continue
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Answer
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Step 1: Determine the depreciation rate per year.
Depreciation per year = ($1,500 - $0) / 5 = $300 per year
The computer has an estimated service life of 5 years, and it was used for 3 years before being sold. Therefore, the depreciation for these 3 years can be calculated as follows: Depreciation per year = (Cost of the computer - Residual value) / Estimated service life
Step 2: Calculate the accumulated depreciation.
Accumulated depreciation after 3 years = $300 * 3 = $900
Accumulated depreciation after 3 years = Depreciation per year * Number of years
Final Answer
The accounts used to record the disposal of the asset are Accumulated depreciation, Depreciation expense, and Gain/loss on sale of asset.
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