Question: Assume that Gonzalez Company purchased an asset on January 1, 2006, for $60,000. The asset had an estimated life of six years and an estimated residual value of $6,000. The company used the straight-line method to depreciate the asset. On July 1, 2008, the asset was sold for $40,000cash.
Required:
Q1. Make the journal entry to record depreciation for 2008. Also record all transaction necessary for the sale of the asset.
Q2. How should the gain or loss on the sale of the asset be present on the income statement?