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 Chapter 8 Objectives Accounting for Uncollectible Accounts After studying Chapter 8, you will be able to: Define accounting terms related to plant assets and depreciation. Identify accounting concepts and practices related to accounting for plant assets and depreciation. Journalize entries for buying plant assets. Calculate and record property tax expense. Calculate and record depreciation expense for a plant asset using straight- line depreciation. Journalize entries disposing of plant assets. Calculate depreciation expense using other methods. 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

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Exit Ticket for today: Audit Your Understanding 8-3 1.What is recorded on a plant asset record for a plant asset that has been discarded? 2.When an asset is disposed of after the beginning of the fiscal year, what entry may need to be recorded before an entry is made for a discarded plant asset? 3.What is the formula to compute the gain or loss on the sale of a plant asset? 4.When cash is paid and old store equipment is traded for new store equipment, what is the formula for calculating the new equipment’s original cost? 9 LESSON 8-3 In a Word Document, SaveAS: Chapter8-2AYUYourName And drop in my Inbox today!

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Complete the following assignments for Chapter 8-3 today Answer Audit Your Understanding questions on page 241. Complete Work Together 8-3 on Aplia – page 241. Complete On Your Own 8-3 on Aplia – page 241. Complete Application Problem 8-5 on Aplia – page 252. Complete Application Problem 8-6 on Aplia – page 252-253. 10 LESSON 8-2