A company bought a computer for $ 1,500. Three years later, the computer was sold for $300. Assuming a 5-year estimated service life and straight-line depreciation, which account(s) would be used to record the disposal of the assets? Select all that apply.

A. Gain/loss on sale of asset
B. Sales Income
C. Depreciation Expense
D. Fixed Assets
E. Accumulated depreciation

Answer:
A. Gain/loss on sale of asset
B. Sales Income

The correct answer is A. Gain/loss on sale of the asset and B. Sales Income. When a company disposes of an asset, the related accounts are used to record the transaction.

What is a disposal account?

A disposal account computes the rationale for the gain or loss that appears on the income statement. The difference between the disposal profits and the net carrying quantity of the secure asset being disposed of is recorded in the disposal account. The account that will be used to record the sale of assets from now on is Gain/loss on asset sale and Sales Income. The accounts that will be used to document the disposal of assets are as follows: Gain/loss on asset sale and Sales Income.

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