The following journal entries would be recorded upon disposal of the equipment:
                                       Debit            Credit
Cash                                  $43,000
Accumulated depreciation                $72,000
Equipment                                             $112,000
Gain on disposal of asset                                 $3,000
Explanation: Using the straight-line method of depreciation, the following formula applies: ( Cost - Salvage value) / No of years
Depreciation = ($112,000 - $0 ) / 7 years = $16,000 yearly
Straight line depreciation is a common method of depreciation where the value of a fixed asset is reduced over its useful life.
It's used to reduce the carrying amount of a fixed asset over its useful life. With straight line depreciation, an asset's cost is depreciated the same amount for each accounting period.
The straight line depreciation formula for an asset is as follows:
Annual Depreciation Expense = Â (Cost of the Asset - Salvage Value)
                                Useful Life of the Asset
Annual Depreciation Expense Formula
Where:
Therefore, we can conclude that the correct option is B.
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