Chapter 3
Long-Term Assets
98
b) On June 30, 2016, Tiesto Company sold the equipment for $3,000. Prepare a journal entry
to record the depreciation on the disposal and the sale. You will need to recalculate the
depreciation expense for 2016 from part a) to account for the sale part-way during the
year.
Date
Account Title and Explanation
Debit
Credit
Analysis
The owner of Tiesto Company believes that the loss on sale of equipment indicates that the
company has made a mistake while calculating depreciation. Do you agree or disagree?
Explain.
AP-8A (
3
4
)
At the beginning of 2015, an entrepreneur purchased a group of assets as a “bulk purchase”
at an auction sale. The entrepreneur paid $250,000 “as is” for two automobiles, a widget
machine, a forklift truck and a trailer. The items were valued by a professional appraiser as
follows.
Item
Estimated Value
Percentage
Estimated Remaining Life
Auto 1
$10,000
3.22%
3 Years
Auto 2
15,000
4.84%
5 Years
Widget Machine
258,000
83.23%
15 Years
Forklift
15,000
4.84%
5 Years
Trailer
12,000
3.87%
10 Years
Total
310,000
100%
