Multiple Choice
MB replaced a major component of its plant (original cost of the component, $12,000 (60 percent depreciated) , with a new component that cost $17,500 in cash. Therefore, MB should make the following entry:
| 1) Accumulated amortization | 7,200 | |
| Plant | 17,500 | |
| Gain on disposal | 7,200 | |
| Cash | 17,500 | |
| 2) Plant (or accumulated amortization) | 17,500 | |
| Cash | 17,500 | |
| 3) Accumulated amortization | 7,200 | |
| Plant | 5,500 | |
| Loss on disposal | 4,800 | |
| Cash | 17,500 | |
| 4) Plant | 17,500 | |
| Loss on disposal | 12,000 | |
| Plant | 12,000 | |
| Cash | 1,7500 |
A) Choice 1
B) Choice 2
C) Choice 3
D) Choice 4
Correct Answer:
Verified
Correct Answer:
Verified
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