Question

The Accumulated Depreciation – Equipment account of a clothing company had a balance of $110,000 on January 1, 2019. After adjusting entries were posted, the account showed a balance of $132,000 (at the end of 2019). During 2019, the company sold a piece of equipment that cost $45,000 for $22,000. This caused a loss of $1,000. What was the depreciation expense for 2019 if you assume the company did not dispose of other assets in 2019? Please show all steps.

Answer 1

Answer) Depreciation expense for the year 2019 = $44,000

EXPLANATION

Particulars	Amount
Accumulated depreciation, closing (31/12/2019)	$132,000
Accumulated depreciation, opening (01/01/2019)	$110,000
Change in Accumulated depreciation during 2019 ($132,000 - $110,000)	$22,000*

Particulars	Amount
Sold Equipment cost	$45,000
Sold Equipment book value ( Sale price + loss) = 22,000 + 1000	$23,000
Accumulated depreciation on sold equipment	$22,000*

Particulars	Amount
Changes in Accumulated depreciation during 2019	$22,000*
Accumulated depreciation on sold equipment	$22,000*
Depreciation expense for the year 2019 ($22,000 + $22,000)	$44,000

Explanation in Accounting form

Dr Accumulated depreciation Cr

Particulars	Amount($)	Particulars	Amount($)
Machinery Account (Accumulated dep on machinery disposed, transferred to machinery account) (calculated)	22,000	Opening balance (given in question)	110,000
		*Depreciation expense for the year 2019 (balancing figure)	*44,000
Closing balance (given in question)	132,000
Total	154,000	Total	154,000