Disposal of Plant Assets Star Company purchased a computer on January 2, 2012, a
ID: 2518066 • Letter: D
Question
Disposal of Plant Assets
Star Company purchased a computer on January 2, 2012, at a cost of $2,500. The computer is expected to have a useful life of five years and a residual value of $250. Assume that the computer is disposed of on July 1, 2015 and that straight-line depreciation is used.
Record the depreciation expense for half a year.
2015 July 1
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When determining depreciation for partial periods, calculate the annual amount of depreciation. Then, apply the appropriate prorating amount to determine the partial period depreciation.
Record the disposal under each of the following assumptions. For a compound transaction, if an amount box does not require an entry, leave it blank.
1. The computer is discarded.
2015 July 1
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2. The computer is sold for $400.
2015 July 1
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3. The computer is sold for $1,100.
2015 July 1
Record the depreciation expense for half a year.
2015 July 1
Explanation / Answer
Date General Journal Debit Credit 2015 July Depreciation expense-Computer $225 Accumulated Depreciation-Computer $225 2015 July Accumulated Depreciation-Computer $1,575 Loss on disposal of computer $925 Computer $2,500 2015 July Cash $400 Accumulated Depreciation-Computer $1,575 Loss on sale of computer $525 Computer $2,500 2015 July Cash $1,100 Accumulated Depreciation-Computer $1,575 Gain on sale of computer $175 Computer $2,500