Question
In: Accounting
ABC Ltd. sold equipment on June 30 2020 for $110,000. The equipment had originally been purchased...
ABC Ltd. sold equipment on June 30 2020 for $110,000. The equipment had originally been purchased for $160,000 on July 1, 2015. At the time of purchase, the equipment’s useful life was estimated to be ten years and to only be worth $10,000 as scrap value at that time. What was the gain or loss reported by ABC on the sale of the equipment? (State any assumptions you make).
Solutions
Expert Solution
Answer: Gain or (loss) reported by ABC = $25,000 Gain
Explanation:
Assumption: In the absence of information it is assumed that the equipment is depreciated as per the straight-line method.
Depreciation per annum = (Cost - Scrap value) / Estimated useful life
= ($160,000 - $10,000) 10 years = $15,000
Accumulated depreciation as on date of sales [July 1, 2015 to June 30 2020] = $15,000 * 5 years = $75,000
Book value as on June 30 2020 = Cost - Accumulated depreciation
= $160,000 - $75,000 = $85,000
Gain or loss reported by ABC = Sales value - Book value as on June 30 2020
= $110,000 - $85,000 = $25,000 Gain
ekkarill92 answered 2 years agoRelated Solutions
During 2019, a team was sold for $ 39,000. The equipment had originally been purchased for...
During 2019, a team was sold for $ 39,000. The equipment had
originally been purchased for $ 64,000 and had a book value of $
36,000 at the time of sale. The balance of the Accumulated
Depreciation account as of December 31, 2018 was $ 172,000 and as
of December 31, 2019 it was $ 184,000. Determine and calculate the
two adjustments that, based on these data, must be made to net
income if the Indirect Method is used to...
Howarth Manufacturing Company purchased equipment on June 30, 2017, at a cost of $110,000. The residual...
Howarth Manufacturing Company purchased equipment on June 30,
2017, at a cost of $110,000. The residual value of the equipment
was estimated to be $8,000 at the end of a five-year life. The
equipment was sold on March 31, 2021, for $30,000. Howarth uses the
straight-line depreciation method for all of its plant and
equipment. Partial-year depreciation is calculated based on the
number of months the asset is in service.
Required:
1. Prepare the journal entry to record the
sale....
Dalton Inc sold a piece of manufacturing equipment for $20,000 on June 30, 2019. They originally...
Dalton Inc sold a piece of manufacturing equipment for $20,000
on June 30, 2019. They originally bought the equipment for $33,000
on January 1, 2016. Dalton estimated the equipment had a 4 year
useful life with a $1,000 salvage value. Dalton has been using the
straight-line method to depreciate the equipment. The balance in
the Accumulated Depreciation account for the equipment on June 30,
2019 just prior to the sale was $24,000. The adjusting entry Dalton
must make on June...
The following information relates to a company ABC Ltd for the year ended 30 June 2020:...
The following information relates to a company ABC Ltd
for the year ended 30 June 2020:
Transaction totals for the year ended 30 June
2020
R
Credit purchases of raw materials
503750
Freight on raw materiasl purchased (on
credit)
99833
Sales of finished producgts
11440000
Direct Labour:
Factory wages
828600
Pension fund contributions paid by employer
172500
Medical aid paid by employer
227200
UIF Contributions paid by employer
8144
Indirect Labour
500250
Electricity
Factory
211450
Administration offices
127900
Rent Expenses...
The balances in the accounts of Maybe Ltd at 30 June 2019 and 30 June 2020...
The balances in the accounts of Maybe Ltd at 30 June 2019 and 30
June 2020 are:
30th June 2020
‘000
30th June 2019
‘000
Sales (all on credit)
300
420
Cost of Goods Sold
156
132
Doubtful Debts expense
30
36
Interest Expense
24
36
Salaries
36
30
Depreciation
12
18
Cash
172.80
166.80
Inventory
216
192
Accounts Receivable
324
300
Allowance for Doubtful Debts
36
42
Land
180
180
Plant
120
108
Accumulated Depreciation
24
36
Bank Overdraft...
The balances in the accounts of Maybe Ltd at 30 June 2019 and 30 June 2020...
The balances in the accounts of Maybe Ltd at 30 June 2019 and 30
June 2020 are:
2020
‘000
2019
‘000
Sales (all on credit)
300
420
Cost of Goods Sold
156
132
Doubtful Debts expense
30
36
Interest Expense
24
36
Salaries
36
30
Depreciation
12
18
Cash
172.80
166.80
Inventory
216
192
Accounts Receivable
324
300
Allowance for Doubtful Debts
36
42
Land
180
180
Plant
120
108
Accumulated Depreciation
24
36
Bank Overdraft
24
22.80
Accounts Payable...
The balances in the accounts of Maybe Ltd at 30 June 2019 and 30 June 2020...
The balances in the accounts of Maybe Ltd at 30 June 2019 and 30
June 2020 are:
30th JUNE 2020
‘000
30th JUNE 2019
‘000
Sales (all on credit)
300
420
Cost of Goods Sold
156
132
Doubtful Debts expense
30
36
Interest Expense
24
36
Salaries
36
30
Depreciation
12
18
Cash
172.80
166.80
Inventory
216
192
Accounts Receivable
324
300
Allowance for Doubtful Debts
36
42
Land
180
180
Plant
120
108
Accumulated Depreciation
24
36
Bank Overdraft...
ABC Company's Accounting year ends on December 31. Equipment was purchased on June 30 of year...
ABC Company's Accounting year ends on December 31. Equipment was
purchased on June 30 of year 1 for $330,000. So, first year
depreciation will be based on only 6 months of ownership. The
equipment is expected to have a useful life of 5 years, or 15,000
operating hours, and a residual value of $30,000. Compute the
depreciation expense for the years of ownership using the unit of
production and double declining balance depreciation methods.
Actual usage: 4,500 hours first year;...
Ivanhoe Co. purchased equipment on March 1, 2015, for $110,000 on account. The equipment had an...
Ivanhoe Co. purchased equipment on March 1, 2015, for $110,000
on account. The equipment had an estimated useful life of five
years, with a residual value of $5,000. The equipment is disposed
of on February 1, 2018. Ivanhoe Co. uses the diminishing-balance
method of depreciation with a 20% rate and calculates depreciation
for partial periods to the nearest month. The company has an August
31 year end.
Record the acquisition of the equipment on March 1, 2015.
(Credit account titles...
On June 24, 20Y9, a building was sold for $225,000 cash. The building was originally purchased...
On June 24, 20Y9, a building was sold for $225,000 cash. The
building was originally purchased in 20Y1 for $210,000. To date, it
had accumulated depreciation of $20,000. Which of the following is
true on the date of disposition?
A.A gain on sale of $35,000 should be recorded.
B.The building had a net book value of $205,000.
C.The building had a fair market value of $190,000.
D.The building had a net book value of $225,000
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- CS2123 Data Structures - Fall 2019 Assignment 1: Function Runtimes Table Due 9/11/19 by 11:59pm Completing...
- Question 2. Design a 16-1 MUX using any number of lower MUXs, such as 8-1 or...
- . Write a function that takes, as arguments, two objects, value1 and value2. If
- Wii Brothers, a game manufacturer, has a new idea for an adventure game. It can market...
- Consider the distillation of ethanol (C2H5OH) and the combustion of ethanol . Use a bullet point...
- 1.How does Economic exposure to exchange rate movements affect the capital budgeting of a firm? Provide...
- 1.Discuss the interdependence that exists between DSDLC stages. 2.How does normalization eradicate update anomalies from a...
ADVERTISEMENT