Measure DDB depreciation; analyze the effect of a sale of a plant asset
Response to the following problem:
Assume that on January 2, 2014, Design House of Nebraska purchased fixtures for $9,200 cash, expecting the fixtures to remain in service for five years. Design House has depreciated the fixtures on a double-declining-balance basis, with $1,100 estimated residual value. On October 31, 2015, Design House sold the fixtures for $2,700 cash. Record both the depreciation expense on the fixtures for 2015 and then the sale of the fixtures. Apart from your journal entry, also show how to compute the gain or loss on Design House's disposal of these fixtures.