Exercise 1

At December 31, 2013, Company N had the following balances:

Property, plant and equipment = $900,000

Accumulated depreciation = $750,000

On January 1, 2014, Company N sold equipment at $150,000.

Prepare the journal entry to record this transaction.

Cash

150,000

Accumulated depreciation

750,000

   Equipment

900,000

Gain on sale of an asset

        = Sale price - (Cost of the asset - Accumulated depreciation)

Exercise 2

At December 31, 2013, Company B had the following balances:

Property, plant and equipment = $900,000

Accumulated depreciation = $750,000

On January 1, 2014, Company N sold equipment at $210,000.

Prepare the journal entry to record this transaction.

Cash

210,000

Accumulated depreciation

750,000

   Equipment

900,000

   Gain on sale of equipment

60,000