a company bought a computer for 1,500. three years later, the computer was sold for $300. assuming a 5 year estimated service life and straight line depreciation which account(s) would be used to record the disposal of the asset

Answer 1

To record the disposal of the computer, the following accounts would be used:

1. Accumulated Depreciation: This account would be credited to remove the remaining balance of depreciation related to the computer. The accumulated depreciation account represents the total amount of depreciation expense that has been recorded on the computer since it was purchased.

2. Computer Equipment: This account would be debited to remove the cost of the computer from the company's books. The balance in the computer equipment account represents the original cost of the computer.

3. Gain or Loss on Disposal: If the computer is sold for more than its book value (original cost minus accumulated depreciation), a gain on disposal would be recorded. If the computer is sold for less than its book value, a loss on disposal would be recorded. This account is used to reflect the difference between the sale price of the computer and its carrying amount on the company's books.

In this scenario, since the computer was sold for $300 after 3 years of use, it is likely that a loss on disposal would be recorded. The specific amounts would need to be calculated based on the original cost, accumulated depreciation, and sale price of the computer.