IFA58 – Sale of a Capital Asset (Gain or Loss) – Intermediate Accounting

Download the Workbook: http://www.tonybell.com Unlock 100+ Members Accounting Tutorials: https://www.youtube.com/channel/UCNFClg6mzfZ5ixpuH9c7f1A/join In This Video: We work through Problem 11-2A, focusing on the journal entries required when a company disposes of a capital asset. Using a scenario where Speedy Couriers purchases a new delivery van for $60,000, we determine the straight-line depreciation expense based on a 5-year useful life and a $6,000 residual value. Because the van was purchased on August 1 and sold the following year on June 30, we demonstrate the critical step of recording prorated "catch-up" depreciation before calculating the book value at the time of sale. Finally, we prepare the journal entries to remove the asset and its accumulated depreciation from the books, comparing Part A, which results in a gain (sold for $52,000), against Part B, which results in a loss (sold for $45,000). Module Overview (IFA53–IFA61): This module explores the systematic allocation of asset costs and the rules for write-downs. We will examine the major depreciation methods (Straight-Line, Declining Balance, and Units-of-Production), handle partial-year depreciation, and navigate changes in accounting estimates. We will also dive into the specific calculations required for depleting natural resources and walk step-by-step through the strict testing rules and journal entries for asset impairment.