Respuesta :
Explanation:
The computations are as follows
1. For computing the accumulated depreciation balance, first we have to determine the depreciation expense using the straight line method
= (Original cost - residual value) ÷ (expected service life)
= ($910,000 - $60,000) ÷ (10 years)
= ($850,000) ÷ (10 years)
= $85,000
In this method, the depreciation is same for all the remaining useful life
So, the accumulated depreciation balance is
= $85,000 × 2 years
= $170,000
2. Now the book value is
= Original cost - accumulated depreciation
= $910,000 - $170,000
= $740,000
c. Now the gain or loss is
= Book value - cash received
= $740,000 - $700,000
= $40,000 loss
d. And, the journal entry is
Cash $700,000
Accumulated depreciation $170,000
Loss on sale of oven $40,000
To Oven $910,000
(Being the sale of the oven is recorded)
Based on the information given, the correct answers will be $170,000 ; $740,000 and $40,000 loss
The depreciation expense will be:
= (Original cost - residual value) / (expected service life)
= ($910,000 - $60,000) / (10 years)
= ($850,000) / (10 years)
= $85,000
Therefore, the accumulated depreciation balance will be:
= $85,000 × 2 years
= $170,000
2. The book value will be:
= Original cost - Accumulated depreciation
= $910,000 - $170,000
= $740,000
The gain or loss will be calculated thus
= Book value - cash received
= $740,000 - $700,000
= $40,000
Lastly, the journal entry will be:
Dr Cash $700,000
Dr Accumulated depreciation $170,000
Dr Loss on sale of oven $40,000
Cr Oven $910,000
(Being the sale of the oven is recorded)
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