In: Accounting
1. Required information
Use the following information for the Quick Study below.
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 | $ | 220,000 | $ | 310,000 | ||||
Accum. Depr.—Equipment | (116,000 | ) | (226,000 | ) | ||||
Equipment, net | $ | 104,000 | $ | 84,000 | ||||
Buildings | $ | 420,000 | $ | 440,000 | ||||
Accum. Depr.—Buildings | (124,000 | ) | (309,000 | ) | ||||
Buildings, net | $ | 296,000 | $ | 131,000 | ||||
QS 16-6 Indirect: Computing investing cash flows LO P2
During 2017, a building with a book value of $78,000 and an
original cost of $340,000 was sold at a gain of $68,000.
1. How much cash did Anders receive from the sale
of the building?
2. How much depreciation expense was recorded on
buildings during 2017?
3. What was the cost of buildings purchased by
Anders during 2017?
1.Cash received from the sale of building:
2.Depreciation expense:
3.Purchase of building:
Original cost of $340,000
Book value of bulidings = $78,000
Gain on sale = $68,000
1. Cash received from the sale = Sale price = Book value + Gain = $78,000 + $68,000 = $146,000
2. Depreciation Expense during 2017:
When an asset is sold, asset's cost along with asset's accumulated depreciation will be removed from the balance sheet.
Beginning Accumulated Depreciation of buildings for the year 2017 | $309,000 |
Less: Accumulated Depreciation of the building sold ($340,000 - $78,000) [Original Cost - Book Value = Accumulated Depreciation] |
($262,000) |
$47,000 | |
Ending Accumulated Depreciation of the buildings for the year 2017 | $124,000 |
Difference ---> Depreciation expenses [$124,000 - $47,000] | $77,000 |
3. Buildings Purchase during 2017
Beginning Original cost of the buildings for the year 2017 | $440,000 |
Less: Original cost of the building sold | ($340,000) |
$100,000 | |
Ending Original cost of the buildings for the year 2017 | $420,000 |
Difference ---> Purchases during 2017 [$420,000 - $100,000] | $320,000 |