Question

What effect does a company's sale of equipment have on the equipment's accumulated depreciation on the balance sheet?

A. It is removed entirely.
B. It is not changed.
C. It is increased by the sale value.
D. It is decreased by the sale value.

Answer 1

A. It is removed entirely.

Step-by-step explanation:

After the equipment has been sold, entries are made to remove it from the balance sheet. The equipment is not an asset of the business anymore hence should not appear in the balance sheet. one equipment is sold, the accountant needs to update its accumulated depreciation and determine its book value.

Journal entries are posted to completely remove the accumulated depreciation from the books and the balance sheet.