Provide a journal entry to calculate the gain on sale

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1. The client depends on you, the CPA, to provide journal entries for activity in fixed assets. While discussing fixed assets, the client divulges that he got a great deal to upgrade his laser dermatology equipment. Ultimately, you find out that $569,888 of new equipment was purchased and placed in service on 6/18/2014.

2. Furthermore, and much after the fact, you discover that old medical equipment was sold to an unrelated party for $75,000 cash. The original cost of the equipment was $300,000 and it was fully depreciated (no Sec. 179). The cash was deposited in one of the shareholders personal accounts.

a. Provide a journal entry to calculate the gain on sale and adjust the fixed asset and accumulated depreciation accounts. (Use the AJEs worksheet)

b. What is the nature of this gain?

c. Could the Dr. have structured this sale in a different way to avoid taxable income? How?

Reference no: EM131815285

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