Harbourline sells its truck on 30 September 2025 for 35,000 cash. After the depreciation update, cost is 90,000 and accumulated depreciation $60,000. Record the sale.
Harbourline sells its truck on 30 September 2025 for 35,000 cash. After the depreciation update, cost is 90,000 and accumulated depreciation $60,000. Record the sale.
Answer
Dr Cash 35000; Dr Accumulated Depreciation—Truck 60000; Cr Truck 90000; Cr Gain on Disposal 5000
Accounts - Cash - Accumulated Depreciation—Truck - Truck - Gain on Disposal - Loss on Disposal - Depreciation Expense - Sales Revenue Proceeds 35,000 − carrying amount 30,000 = gain 5,000. Cash in (Dr); the contra-asset removed (Dr Accumulated Depreciation—Truck 60,000); the cost removed (Cr Truck 90,000); the gain is the credit plug. Sales Revenue is the trap — the truck is not merchandise, and the gain is the difference, not the $35,000. Crediting accumulated depreciation is the other trap; a contra-asset being removed is debited.
LI §8.6; L1 §10.4, §10.4.2