1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8-3 Disposing of Plant Assets Disposing of plant assets. Gain/loss on plant assets. Trading plant assets. Selling land and buildings

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Competency: Accounting Adjustments and Valuation/Accounting for Plant Assets Objectives 46. Compare the methods of calculated depreciation. 47. Record depreciation of plant assets. 48. Record sale, trade-in, and disposal of plant assets. 2 LESSON 8-3

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 8-3 1.Record entry to remove plant asset from accounts. 2.Write the date, amount, and type of disposal. DISCARDING A PLANT ASSET WITH NO BOOK VALUE page 235 1 January 5, 20X6. Discarded storage cabinet: original cost, $275.00; total accumulated depreciation through December 31, 20X5, $275.00. Memorandum No. 72. 2

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 8-3 June 30, 20X6. Discarded office table: original cost, $200.00; total accumulated depreciation through December 31, 20X5, $140.00; additional depreciation to be recorded through June 30, 20X6, $20.00. Memorandum No. 92. 1.Record a partial year’s depreciation expense. 2.Record the partial year’s depreciation. 4.Record entry to remove plant asset from accounts. 3.Write the date, amount, and type of disposal. DISCARDING A PLANT ASSET WITH A BOOK VALUE page 236 1 4 3 2

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 8-3 3.Record entry to remove plant asset from accounts. 1.Compute the gain or loss on the sale. 2.Write the date, amount, and type of disposal. SELLING A PLANT ASSET page 267 1 2 3 January 4, 20X6. Received cash from sale of fax machine, $185.00: original cost, $600.00; total accumulated depreciation through December 31, 20X5, $400.00. Receipt No. 60.

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 8-3 1. Compute the original cost of the new plant asset. TRADING A PLANT ASSET page 238 1 4 June 27, 20X6. Paid cash, $850.00, plus old counter for new store counter: original cost of old counter, $1,000.00; total accumulated depreciation through June 27, 20X6, $765.00. Memorandum No. 130 and Check No. 154. 4.Record entry to remove old plant asset and add new plant asset. 2.Write the date and type of disposal and the disposal amount. 2 3 3.Complete section 1 for the new plant asset.

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 8-3 3.Record entry to remove plant assets from accounts. 1.Compute the gain on sale of plant assets. 2.Write the date, type, and amount of disposal. SELLING LAND AND BUILDINGS page 239 1 3 January 2, 20X6. Fidelity Company sold land with a building for $97,000.00 cash; original cost of land, $25,000.00; original cost of building, $150,000.00; total accumulated depreciation on building through December 31, 20X5, $85,000.00. Receipt No. 105. 2

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 8-3 CALCULATING THE GAIN ON SALE OF LAND AND BUILDINGS page 240