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23 E

Horngren'S Financial And Managerial Accounting
Found in: Page 488

Short Answer

Recording partial-year depreciation and sale of an asset On January 2, 2016, Pet Spa purchased fixtures for $37,800 cash, expecting the fixtures to remain in service for six years. Pet Spa has depreciated the fixtures on a straight-line basis, with $9,000 residual value. On May 31, 2018, Pet Spa sold the fixtures for $24,200 cash. Record both depreciation expense for 2018 and sale of the fixtures on May 31, 2018

Loss on sale of Equipment value is $2,000.

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Step by Step Solution

Definition of Straight-Line Method

The method of calculating the depreciation under which each year of the useful life of the asset reports the same depreciation is known as the straight-line method. The depreciation method under this method is calculated using salvage value, cost, and useful life.

Calculate the Depreciation by using Straight – Line method


Accounts and Explanation

Debit $

Credit $

31 May 2018

Depreciation expenses


Accumulated depreciation


31 May 2018



Accumulated depreciation


Loss on sale


Furniture and Fixture


(To record the sale of asset)

Working note:

Calculation of annual depreciation

Depreciation from 1 Jan 2018 to 31 May 2018:




Cash received against sale

$ 24,200

Less: Book value of asset disposed of cost

$ 37,800

Less : Accumulated Depreciation

($ 11,600)




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