For each of the following three independent situations determine the gain or loss on the sale or disposal of the asset. Prepare the journal entry required at the time of sale or disposal. Assume that all assets are depreciated using the straight$-$line method and in every case, a year$-$end of December $31.$

$1.$ Equipment purchased July $1,20$X$9,$ for $$75,000$ was sold for $$9,500$ on June $30,20$X$14.$ At the time of purchase, it was estimated to have a $$5,000$ residual value and a five$-$year useful life. Assume that a half$-$year depreciation is taken in the year the equipment was acquired and in the year it was sold.

$2.$ Calibrating equipment was purchased on July $10,20$X$13,$ for $$120,000.$ At the time, it was estimated to have a six$-$year useful life and no residual value. On September $30,20$X$14,$ there was a fire in the plant, and the equipment suffered water damage and is beyond repair. The company received $$50,000$ from the insurance company for the equipment. Assume depreciation is applied monthly.

$3.$ Office furniture was purchased on February $11,20$X$5$ for $$25,000$ and was estimated to have a useful life of ten years and a salvage value of $$2,500.$ On August $1,20$X$12,$ the company moved to new offices and donated the old furniture to charity. Assume that a half$-$year depreciation is taken in the year the furniture was acquired and in the year it was donated.

Answer rating: 100% (QA)

1 Equipment sold on June 30 20X14 Cost of equipment 75000 Accumulated depreciation 25 years July 1 2... View the full answer