An asset has a book value of $12,000 on December 31, Year 4. The asset has been depreciated using the straight- line method at $2,500 per year. The asset is sold on December 31, Year 4 for $14,500. What should the company record regarding the sale? a. A loss on sale of $2,500 b. A gain on sale of $2,500 c. A gain on sale of $14,500 d. A loss on sale of $14,500 e. No gain or loss is recorded

An asset has a book value of $12,000 on December 31, Year 4. The asset has been depreciated using the straight- line method at $2,500 per year. The asset is sold on December 31, Year 4 for $14,500. What should the company record regarding the sale? a. A loss on sale of $2,500 b. A gain on sale of $2,500 c. A gain on sale of $14,500 d. A loss on sale of $14,500 e. No gain or loss is recorded

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 7RE: Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of...

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Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
Albany Corporation purchased equipment at the beginning of Year 1 for 75,000. The asset does not have a residual value and is estimated to be in service for 8 years. Calculate the depreciation expense for Years 1 and 2 using the double-declining-balance method. Round to the nearest dollar.
Akron Incorporated purchased an asset at the beginning of Year 1 for 375,000. The estimated residual value is 15,000. Akron estimates that the asset has a service life of 5 years. Calculate the depreciation expense using the sum-of-the-years-digits method for Years 1 and 2 of the assets life.
Assume the same information as in RE11-3, except that Albany Corporation purchased the asset on April 1, Year 1. Calculate the depreciation for Year 1 and Year 2 using the double-declining-balance method. Round to the nearest dollar.
A fixed asset with a 5-year estimated useful life is sold during the second year. How would the use of the straight-line method of depreciation instead of the double-declining-balance method of depreciation affect the amount of gain or loss on the sale of the fixed asset?
Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?
Dinnell Company owns the following assets: In the year of acquisition and retirement of an asset, Dinnell records depreciation expense for one-half year. During 2020, Asset A was sold for 7,000. Required: Prepare the journal entries to record depreciation on each asset for 2017 through 2020 and the sale of Asset A. Round all answers to the nearest dollar.
An asset's book value is $18,200 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,200 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,200, the company should record: A). A loss on sale of $1,800. B). A loss on sale of $3,000. C). A gain on sale of $1,800. D). A gain on sale of $3,000. E). Neither a gain nor a loss is recognized on this type of transaction.
An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record: A. A loss on sale of $12,000. B. A gain on sale of $12,000. C. Neither a gain nor a loss is recognized on this transaction. D. A gain on sale of $3,000. E. A loss on sale of $3,000.
An asset's book value is $19,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $4,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $16,000, the company should record: a. A loss on sale of $3,000. b. Neither a gain nor a loss is recognized in this type of transaction. c. A gain on sale of $3,000. d. A gain on sale of $3,000. e. A loss on sale of $3,000.
An asset's book value is $15,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 using the straight-line method. Assuming the asset is sold on December 31, Year 5 for $12,000, the company should record: A. A loss on sale of $2,000. B. Neither a gain nor a loss is recognized in this type of transaction. C. A gain on sale of $2,000. D. A gain on sale of $3,000. E. A loss on sale of $3,000.
An asset's book value is