Question

What effect does a company's sale of equipment have on the equipment's

accumulated depreciation on the balance sheet?
A. It is increased by the sale value.
B. It is not changed.
C. It is removed entirely.
D. It is decreased by the sale value.

Answer 1

C. It is removed entirely.

Step-by-step explanation:

Once an asset is sold, e.g. equipment, vehicles, machinery, buildings, etc., it is removed entirely from the balance sheet. This means that both the asset's historic cost and accumulated depreciation will be removed. Accumulated depreciation is a contra asset account that decreases the asset's carrying value, but if the asset is gone, so is accumulated depreciation.