**Morris Incorporated: Equipment Depreciation Analysis**Morris Incorporated recorded the following transactions over the life of a piece of equipment purchased in Year 1:- **January 1, Year 1**: Purchased equipment for $14,600 cash. The equipment had an estimated five-year life and a $6,630 salvage value, to be depreciated using the straight-line method.- **December 31, Year 1**: Recorded depreciation expense for Year 1.- **September 30, Year 2**: Undertook routine repairs costing $786.- **December 31, Year 2**: Recorded depreciation expense for Year 2.- **January 1, Year 3**: Made an adjustment costing $2,940 to the equipment. The adjustment improved the quality of the output but did not affect the life and salvage value estimates.- **December 31, Year 3**: Recorded depreciation expense for Year 3.- **June 1, Year 4**: Incurred $331 cost to oil and clean the equipment.- **December 31, Year 4**: Recorded depreciation expense for Year 4.- **January 1, Year 5**: Overhaul performed at a cost of $7,570, extending the equipment's total life to seven years. The salvage value did not change.- **December 31, Year 5**: Recorded depreciation expense for Year 5.- **October 1, Year 6**: Received and accepted an offer of $15,100 for the equipment.**Required:**a. Use a horizontal statements model to show the effects of these transactions on the financial statements. The first event is recorded as an example.b. Determine the depreciation expense for the income statements for Years 1 through 5.c. Determine the book value (cost – accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5.d. Determine the gain or loss Morris will report on the disposal of the equipment on October 1, Year 6.**Depreciation Expense Chart:**- **Year 1**: $1,594- **Year 2**: $1,594- **Year 3**: $1,324- **Year 4**: $1,324- **Year 5**: $1,324**Instructions

The depreciation expenses in the income statement is the expenses which has been incurred on the…

b. Determine the amount of depreciation expense to be reported on the income statements for Years 1 through 5. c. Determine the book value (cost-accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5. d. Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1, Year 6. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Determine the amount of depreciation expense to be reported on the income statements for Years 1 through 5. Note: Round your answers to nearest dollar amount. Year Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Expense $ $ $ 1,504 1,504 1,324

b. Determine the amount of depreciation expense to be reported on the income statements for Years 1 through 5. c. Determine the book value (cost-accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5. d. Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1, Year 6. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Determine the amount of depreciation expense to be reported on the income statements for Years 1 through 5. Note: Round your answers to nearest dollar amount. Year Year 1 Year 2 Year 3 Year 4 Year 5 Depreciation Expense $ $ $ 1,504 1,504 1,324

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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