CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 18-4LESSON 18-4

Disposing of Plant Assets

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-4

Disposal of Plant Asset:Disposal of Plant Asset:

Journal entry:1. Removes original cost of the plant asset and its related

accumulated depreciation.2. Recognizes any cash or other asset received for the old plant

asset.3. Recognizes any gain or loss on the disposal.

Calculation:1. Original Cost – Accum. Dep. = Book Value (BV) of Plant Asset (PA)2. Cash received for disposal – BV of PA = Gain or Loss of PA

gain on plant assets loss on plant assets

page 550

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-4

SALE OF A PLANT ASSET FOR SALE OF A PLANT ASSET FOR BOOK VALUEBOOK VALUE

1. Record an entry in the cash receipts journal to remove the original cost.

page 546

January 6, 20X6. Received cash from sale of display case, $250.00: original cost, $3,250.00; total accumulated depreciation through December 31, 20X5, $3,000.00. Receipt No. 4.

2. Check the type of disposal, and write the date, and disposal amount in Section 2 of the plant asset record.

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-4

RECORDING A PLANT ASSET’S DEPRECIATION RECORDING A PLANT ASSET’S DEPRECIATION EXPENSE FOR A PARTIAL YEAREXPENSE FOR A PARTIAL YEAR page 547

April 4, 20X7. Recorded a partial year’s depreciation on a safe to be sold, $60.00. Memorandum No. 31.

1. Debit the depreciation expense account.2. Credit the accumulated depreciation account.3. Update Section 3 of the plant asset record.

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-4

SALE OF A PLANT ASSET FOR MORE SALE OF A PLANT ASSET FOR MORE THAN BOOK VALUETHAN BOOK VALUE

1. Remove the original cost. Record the gain on the sale. Record the cash received from the sale.

page 548

April 4, 20X7. Received cash from sale of safe, $425.00: original cost, $1,800.00; accumulated depreciation through April 4, 20X7, $1,500.00. Receipt No. 47.

2. Check the type of disposal. Write the date and disposal amount in Section 2 of the plant asset record.

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CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-4

1. Remove the original cost. Record the loss on the sale. Record the cash received from the sale.

SALE OF A PLANT ASSET FOR LESS THAN SALE OF A PLANT ASSET FOR LESS THAN BOOK VALUEBOOK VALUE

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page 549

October 6, 20X7. Received cash from sale of a computer, $150.00: original cost, $1,900.00; total accumulated depreciation through October 1, 20X7, $1,500.00. Receipt No. 281.

2. Check the type of disposal and write the date and disposal amount in Section 2.

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