Assume That Halpern Company Purchased an Asset on January 1

Essay

Assume that Halpern Company purchased an asset on January 1, 2014, for $122,800. The asset had an estimated life of six years and an estimated residual value of $2,200. The company used the straight-line method to depreciate the asset. Assume that Halpern Company sold the asset on July 1, 2015, and received $96,000 cash and a note for an additional $22,000.
REQUIRED:
1. Identify the effects on the accounting equation of the transactions to record depreciation for 2015 and all transactions necessary for the sale of the asset.
2. How should the gain or loss on the sale of the asset be presented on the income statement?