After the fact, you discover that old medical equipment was sold to an unrelated party for $75,000 cash. The original cost of the equipment was $300,000 and it was fully depreciated (no Sec. 179). The cash was deposited in one of the shareholders personal accounts.

a. Provide a journal entry to calculate the gain on sale and adjust the fixed asset and accumulated depreciation accounts.

b. What is the nature of this gain?

c. Could the Dr. have structured this sale in a different way to avoid taxable income? How?

Date		Num		Memo		Account		Debit		Credit
12/31/2014		2014 Adj 1		to sell obsolete equipment		17000 Accumulated Depreciation
				to sell obsolete equipment		16100 Medical Equipment
				to sell obsolete equipment		18100 Loan to Shareholder
				to sell obsolete equipment		75000 Gain on Sale of Assets
								0.00		0.00
12/31/2014		2014 Adj 2		to record 2014 depreciation on assets placed in service prior to 2014		62400 Depreciation Expense
				to record 2014 depreciation on assets placed in service prior to 2014		17000 Accumulated Depreciation
				to record Sec. 179 expense		62400 Depreciation Expense
				to record Sec. 179 expense		17000 Accumulated Depreciation
				to record depreciation on assets placed in service in 2014		62400 Depreciation Expense
				to record depreciation on assets placed in service in 2014		17000 Accumulated Depreciation
								0.00		0.00
								0.00		0.00