When a company sells equipment for cash on a date other than the last day of the accounting period, it must:

Multiple Choice

• record Depreciation Expense for the entire accounting period during which the equipment is sold.

• record the disposal by reducing the Equipment account and increasing a revenue account; a gain or loss is reported if the decrease and increase are not equal.

• first record Depreciation Expense for the period up to the date of sale, and then record the disposal by increasing Cash and decreasing both Equipment and Accumulated Depreciation; a gain or loss is reported if the proceeds from the sale do not equal the asset's book value.

• record Accumulated Depreciation for the entire current accounting period.