Question
In: Accounting
[The following information applies to the questions displayed below.] The plant assets section of the comparative...
[The following information applies to the questions
displayed 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 | $ | 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 12-5 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?
Solutions
Expert Solution
|
Answer 1) Receipts from sale of Equipment |
|
|
Book Value of equipment |
$ 55,000.00 |
|
Less: loss incurred on sale |
$ 6,000.00 |
|
Cash received from sale |
$ 49,000.00 |
|
Answer 2) Calculation of Depreciation for the year |
||||||
|
Opening Accumulated depreciation balance |
$ 240,000.00 |
|||||
|
Less: Depreciation of Equipment sold(285000-55000) |
$ 230,000.00 |
|||||
|
$ 10000.00 |
||||||
|
Less: Closing balance of Accumulated depreciation |
$ 130,000.00 |
|||||
|
Depreciation Expense for the year |
$ 120000.00 |
|||||
|
Note- |
||||||
|
1) Accumulated depreciation on sold assets is Debited to accumulated depreciation account which increases the balance on Accumulated Depreciation Account. |
||||||
|
2)The difference between book value and cost is equal to depreciation charged throughout the life of asset. |
||||||
Answer 3) Calculation of Equipment purchased.
|
Gross Opening balance of Equipment account |
$ 345,000.00 |
|
Less: Original value of Equipment sold during year |
$ 285,000.00 |
|
$ 60,000.00 |
|
|
Gross Closing balance of Equipment account |
$ 255,000.00 |
|
Equipment purchased |
$ 195,000.00* |
*The Closing value of equipment account should have been opening balance minus equipment sold. But the closing balance is 255000 that means equipment is purchased too.
ekkarill92 answered 1 year agoRelated Solutions
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