Mousey Company purchased a depreciable asset for $1,000,000 on May 1, 2005. The estimated salvage value is

Question:

Mousey Company purchased a depreciable asset for $1,000,000 on May 1, 2005. The estimated salvage value is $100,000, and the estimated useful life is 10 years. The straight-line method is used for depreciation. On June 1, 2009 the asset is sold.

a) What is the balance in accumulated depreciation on when the asset is sold?

b) Record the appropriate journal entry on June 1, 2009 assuming the asset is sold for $500,000.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...