Reference no: EM132745811
Problem 1: An equipment cost $90,000 when it was purchased on January 1, 2010. It was depreciated by the straight-line method based on a 9-year life with no salvage value. On June 30, 2017, the asset was discarded with no cash proceeds. What journal entry should the company make to retire the asset?
Option 1: Accumulated Depreciation..................................................... 70,000
Loss on Disposal of Equipment....................................... 20,000
Equipment............................................................... 90,000
Option 2: Accumulated Depreciation..................................................... 90,000
Equipment............................................................... 90,000
Option 3: Accumulated Depreciation..................................................... 75,000
Loss on Disposal of Equipment....................................... 15,000
Equipment............................................................... 90,000
Option 4: Accumulated Depreciation..................................................... 70,000
Equipment............................................................... 70,000