1. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 18-4 Disposing of Plant Assets

2. CENTURY 21 ACCOUNTING © Thomson/South-Western 2 LESSON 18-4 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

3. CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 18-4 SALE OF A PLANT ASSET FOR BOOK 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. 1 2

4. CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 18-4 RECORDING A PLANT ASSET’S DEPRECIATION EXPENSE 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. 1 2 3

5. CENTURY 21 ACCOUNTING © Thomson/South-Western 5 LESSON 18-4 SALE OF A PLANT ASSET FOR MORE THAN 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. 1 2

6. CENTURY 21 ACCOUNTING © Thomson/South-Western 6 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 BOOK VALUE 1 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. 2