Sloan Company uses its own executive charter plane that originally cost $800,000. It has recorded straight-line depreciation on the plane for six full years, with an $80,000 expected salvage value at the end of its estimated 10-year useful life. Sloan disposes of the plane at the end of the sixth year.
a. At the disposal date, what is the (1) accumulated depreciation and (2) net book value of the plane?
b. Prepare a journal entry to record the disposal of the plane assuming that the sales price is
1. Cash equal to the book value of the plane.
2. $195,000 cash.
3. $600,000 cash.
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