In: Accounting
The plant assets section of the comparative balance sheets of Anders Company is reported below.
ANDERS COMPANY | ||||||||
Comparative Balance Sheets | ||||||||
2017 | 2016 | |||||||
Plant assets | ||||||||
Equipment | $ | 255,000 | $ | 345,000 | ||||
Accum. Depr.—Equipment | (130,000 | ) | (240,000 | ) | ||||
Equipment, net | $ | 125,000 | $ | 105,000 | ||||
Buildings | $ | 455,000 | $ | 475,000 | ||||
Accum. Depr.—Buildings | (145,000 | ) | (330,000 | ) | ||||
Buildings, net | $ | 310,000 | $ | 145,000 | ||||
QS 16-5 Indirect: Computing investing cash flows LO P2
During 2017, equipment with a book value of $55,000 and an original cost of $285,000 was sold at a loss of $6,000.
1. How much cash did Anders receive from the sale of equipment?
2. How much depreciation expense was recorded on equipment during 2017?
3. What was the cost of new equipment purchased by Anders during 2017?
Requirement 1
Cash received on sale = $49,000
Working
Cash received on sale of Equipment | |
Cost of equipment sold | $ 285,000.00 |
Less: Accumulated depreciation | $ ( 230,000.00) |
Book value of asset sold | $ 55,000.00 |
Less: loss on sale | $ (6,000.00) |
Cash received on sale of equipment | $ 49,000.00 |
.
Requirement 2
Depreciation expense on equipment = $120,000
Working
Depreciation expense during year | |
Accumulated Depreciation beginning balance | $ 240,000.00 |
Less: Depreciation on equipment sold | $ (230,000.00) |
Subtotal | $ 10,000.00 |
Ending balance of Accumulated depreciation | $ 130,000.00 |
Depreciation expense during year (130000-10000) | $ 120,000.00 |
.
.
Requirement 3
cost of new equipment purchased by Anders during 2017 = $195,000
Working
Equipment beginning value | $ 345,000.00 |
Less: Cost of equipment sold | $ 285,000.00 |
$ 60,000.00 | |
Equipment Ending value | $ 255,000.00 |
Equipment purchased during year (255000-60000) | $ 195,000.00 |