• Theclientdependsonyou,theCPA,toprovidejournalentriesforactivityinfixedassets.Whilediscussingfixedassets,theclientdivulgesthathegotagreatdealtoupgradehislaserdermatologyequipment.Ultimately,youfindoutthat$569,888ofnewequipmentwaspurchasedandplacedinserviceon6/18/2014.
• Furthermore, and much 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 shareholder's personal accounts.
  • Provide a journal entry to calculate the gain on sale and adjust the fixed asset and accumulated depreciation accounts.
  • What is the nature of this gain?
  • Could the Dr. have structured this sale in a different way to avoid taxable income? How?
• The client depends on his accountant to provide a journal entry for the annual depreciation expense. They have adopted a policy of treating book depreciation equal to tax depreciation. Depreciation expense for the year will include:
  • Depreciation on assets placed in service prior to 2014 is: $86,769
  • Maximize Sec. 179 expense on assets placed in service in 2014.
  • TakeSec.168(k)-50%Bonus-onnewequipmentifapplicable.

Based on the provided information, I need to make adjustments to the following accounts:

Loan to Shareholder

Medical Equipment

Accumulated Depreciation

Accounts Payable

Accrued Salaries

Depreciation Expense

Gain on Sale of Assets