Question

mill creek golf club purchased equipment on january 1, 2025, for $48,000. suppose mill creek golf club sold the equipment for $33,000 on december 31, 2027. accumulated depreciation as of december 31, 2027, was $22,000. journalize the sale of the equipment, assuming straight - line depreciation was used
first, calculate any gain or loss on the disposal of the equipment
fair value of assets received
less: book value of asset disposed of
cost
less: accumulated depreciation
gain or (loss)

Explanation:

Step1: Calculate fair value of assets received

The fair value of assets received is the selling price of the equipment, which is $33,000.

Step2: Calculate book value of asset disposed of

The cost of the equipment is $48,000 and the accumulated depreciation is $22,000.
The book value of the asset = Cost - Accumulated Depreciation
$$48000 - 22000=26000$$

Step3: Calculate gain or loss

Gain or Loss = Fair value of assets received - Book value of asset disposed of
$$33000 - 26000 = 7000$$

Answer:

Fair value of assets received: $33,000
Cost: $48,000
Less Accumulated Depreciation: $22,000
Book value of asset disposed of: $26,000
Gain: $7,000

Journal entry:
Debit Cash $33,000
Debit Accumulated Depreciation $22,000
Credit Equipment $48,000
Credit Gain on Disposal of Equipment $7,000