ACCT 102 Alexander Company purchased a piece of equipment for $14,000 and depreciated it for three years over a 5-year estimated life withan expected residual value at the end of 5 years of $2,000. At the end of the third year, Alexander decided to upgrade to equipmentwith increased capacity and sold the original piece of equipment for $7,500.Calculate the gain or loss on the disposal at the end of the third year.on sale by During the past several years the annual net income of Avery Company has averaged $540,000. At the present time the company isbeing offered for sale. Its accounting records show the book value of net assets (total assets minus all liabilities) to be $2,800,000. Thefair value of Avery's net identifiable assets, however, is $3,000,000.An investor negotiating to buy the company offers to pay an amount equal to the fair value for the net identifiable assets and toassume all liabilities. In addition, the investor is willing to pay for goodwill an amount equal to the above-average earnings for threeyears.On the basis of this agreement, what price should the investor offer? A normal return on the fair value of net assets in this industry is 15percent.Price to be offered for Avery Company

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Alexander Company purchased a piece of equipment for $14,000 and depreciated it for three years over a 5-year estimated life with an expected residual value at the end of 5 years of $2,000. At the end of the third year, Alexander decided to upgrade to equipment with increased capacity and sold the original piece of equipment for $7,500. Calculate the gain or loss on the disposal at the end of the third year. on sale by

Alexander Company purchased a piece of equipment for $14,000 and depreciated it for three years over a 5-year estimated life with an expected residual value at the end of 5 years of $2,000. At the end of the third year, Alexander decided to upgrade to equipment with increased capacity and sold the original piece of equipment for $7,500. Calculate the gain or loss on the disposal at the end of the third year. on sale by

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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