Question
In: Accounting
On June 1, 2018, XYZ Company paid $150,000 to purchase some equipment. The equipment was assigned...
On June 1, 2018, XYZ Company paid $150,000 to
purchase some equipment.
The equipment was assigned a useful life of 20 years and was to
be
depreciated using the straight-line
method.
On October 31, 2022, XYZ Company sold the
equipment for $102,970 cash.
XYZ Company recorded a loss on the sale equal to $14,965.
Calculate the residual value that was assigned to
the equipment.
Solutions
Expert Solution
|
Purchase on 1 June 2018 |
150000 |
|
Useful life |
20 year |
|
Sold on 31 October 2022 |
102970 |
|
Loss on equipment |
14965 |
|
Book value on 31 October 20122 |
|
|
Sold value on 31 October 2022 |
102970 |
|
Loss on equipment |
14965 |
|
Book value on 31 October 2022 |
117935 |
|
Depreciation month calculation during 1 June 2018 to 131 October 2022 |
|
|
1 June 2018 to 31 Dec 2018 |
7 month |
|
1 January 2019 to 31 December 2019 |
12 month |
|
1 January 2020 to 31 December 2020 |
12 month |
|
1 January 2021 to 31 December 2021 |
12 month |
|
1 January 2022 to 31 October 2022 |
10 month |
|
Total depreciation month |
53 month |
|
Total month of depreciation |
20*12 month |
240 |
|
Total depreciation charge up to 31 October 2022 |
|
|
Purchase on 1 June 2018 |
150000 |
|
Less: book value on 31 October 20122 |
117935 |
|
Total depreciation charge up to 31 Oct 2022 |
32065 |
|
Total depreciation on equipment |
32065*(240/53) |
145200 |
|
Residual value |
Book value- total depreciation |
150000-145200 |
4800 |
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