E9A

Disposal of Plant Assets

Star Company purchased a computer on January 2, 2012, at a cost of $2,500. The computer is expected to have a useful life of five years and a residual value of $250. Assume that the computer is disposed of on July 1, 2015. Using the straight line method, record the depreciation expense for half a year and the disposal under each of the following assumptions:

1. The computer is discarded.

2. The computer is sold for $400.

3. The computer is sold for $1,100

Disposal of Plant Assets: Star Company