An asset with an original cost of $75,000,a residual value of $7,500,and a useful life of 5 years is given away without any consideration at the end of year five.The entry to record this is
A)Dr.Accumulated depreciation,Dr.Loss on disposal,Cr.Long-Term asset.
B)Dr.Accumulated depreciation,Cr.Gain on disposal,Cr.Long-Term asset.
C)Dr.Long-Term asset,Cr.Accumulated depreciation.
D)Dr.Accumulated depreciation,Cr.Long-Term Asset.

Question

Quizplus · Accepted Answer

At the end of its useful life, the asset is fully depreciated. The entry involves debiting accumulated depreciation for the total depreciation taken ($75,000 - $7,500 = $67,500), debiting loss on disposal for the residual value ($7,500), and crediting the long-term asset for its original cost ($75,000).

An Asset with an Original Cost of $75,000,a Residual Value