Zimmer Company owns an executive plane that originally cost $1,536,000. It has recorded straight‑line depreciation on the plane for seven full years, calculated assuming a $192,000 expected salvage value at the end of its estimated 10‑year useful life. Zimmer disposes of the plane at the end of the seventh year.a. At the disposal date, what is the (1) cumulative depreciation expense and (2) net book value of the plane?(1) Cumulative depreciation expense $Answer (2) Net book value $Answer b. How much gain or loss is reported at disposal if the sales price is:Note: Do not use a negative sign with your answers. Sales PriceGain or Loss 1.A cash amount equal to the plane’s net book value. 2.$342,000 3.$840,000

Given Original cost = $1536000 Salvage value =$192000 Life of asset =10 years Hence straight line…

Answered: (1) cumulative depreciation expense and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Zimmer Company owns an executive plane that originally cost $1,536,000. It has recorded straight‑line depreciation on the plane for seven full years, calculated assuming a $192,000 expected salvage value at the end of its estimated 10‑year useful life. Zimmer disposes of the plane at the end of the seventh year.

a. At the disposal date, what is the (1) cumulative depreciation expense and (2) net book value of the plane?
(1) Cumulative depreciation expense $Answer

(2) Net book value $Answer

b. How much gain or loss is reported at disposal if the sales price is:
Note: Do not use a negative sign with your answers.

Sales Price Gain or Loss

1. A cash amount equal to the plane’s net book value.

2. $342,000

3. $840,000

	Sales Price	Gain or Loss
1.	A cash amount equal to the plane’s net book value.
2.	$342,000
3.	$840,000

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