Problem
New Morning Bakery is in the process of closing its operations. It sold its two-year-old bakery ovens to Great Harvest Bakery for $540,000. The ovens originally cost $734,000, had an estimated service life of 10 years, and an estimated residual value of $44,000. New Morning Bakery uses the straight-line depreciation method for all equipment.
1. Calculate the balance in the accumulated depreciation account at the end of the second year
2. Calculate the book value of the ovens at the end of the second year.
3. What is the gain or loss on the sale of the ovens at the end of the second year?
4. Record the sale of the ovens at the end of the second year.