Case E Sanders Company purchased the following on January 1, 2019: • Office equipment at a cost of $60,000 with an estimated useful life to the company of three years and a residual value of $15,000. The company uses the double-declining-balance method of depreciation for the equipment. • Factory equipment at an invoice price of $880,000 plus shipping costs of $20,000. The equipment has an estimated useful life of 100,000 hours and no residual value. The company uses the units-of-production method of depreciation for the equipment. • A patent at a cost of $330,000 with an estimated useful life of 15 years. The company uses the straight-line method of amortization for intangible assets with no residual value. The company's year ends on December 31. Required: 1-a. Prepare a partial depreciation schedule of office equipment for 2019, 2020, and 2021. 1-b. Prepare a partial depreciation schedule of factory equipment. The company used the equipment for 8,000 hours in 2019, 9,200 hours in 2020, and 8,900 hours in 2021. 2. On January 1, 2022, Sanders altered its corporate strategy dramatically. The company sold the factory equipment for $700,000 in cash. Record the entry related to the sale of the factory equipment. 3. On January 1, 2022, when the company changed its corporate strategy, its patent had estimated future cash flows of $210,000 and a fair value of $190,000. What would the company report on the income statement (account and amount) regarding the patent on January 1, 2022?
Case E Sanders Company purchased the following on January 1, 2019: • Office equipment at a cost of $60,000 with an estimated useful life to the company of three years and a residual value of $15,000. The company uses the double-declining-balance method of depreciation for the equipment. • Factory equipment at an invoice price of $880,000 plus shipping costs of $20,000. The equipment has an estimated useful life of 100,000 hours and no residual value. The company uses the units-of-production method of depreciation for the equipment. • A patent at a cost of $330,000 with an estimated useful life of 15 years. The company uses the straight-line method of amortization for intangible assets with no residual value. The company's year ends on December 31. Required: 1-a. Prepare a partial depreciation schedule of office equipment for 2019, 2020, and 2021. 1-b. Prepare a partial depreciation schedule of factory equipment. The company used the equipment for 8,000 hours in 2019, 9,200 hours in 2020, and 8,900 hours in 2021. 2. On January 1, 2022, Sanders altered its corporate strategy dramatically. The company sold the factory equipment for $700,000 in cash. Record the entry related to the sale of the factory equipment. 3. On January 1, 2022, when the company changed its corporate strategy, its patent had estimated future cash flows of $210,000 and a fair value of $190,000. What would the company report on the income statement (account and amount) regarding the patent on January 1, 2022?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
Transcribed Image Text:Case E
Sanders Company purchased the following on January 1, 2019:
Office equipment at a cost of $60,000 with an estimated useful life to the company of three years and a residual value of $15,000.
The company uses the double-declining-balance method of depreciation for the equipment.
Factory equipment at an invoice price of $880,000 plus shipping costs of $20,000. The equipment has an estimated useful life of
100,000 hours and no residual value. The company uses the units-of-production method of depreciation for the equipment.
A patent at a cost of $330,000 with an estimated useful life of 15 years. The company uses the straight-line method of amortization
for intangible assets with no residual value.
The company's year ends on December 31.
Required:
1-a. Prepare a partial depreciation schedule of office equipment for 2019, 2020, and 2021.
1-b. Prepare a partial depreciation schedule of factory equipment. The company used the equipment for 8,000 hours in 2019, 9,200
hours in 2020, and 8,900 hours in 2021.
2. On January 1, 2022, Sanders altered its corporate strategy dramatically. The company sold the factory equipment for $700,000 in
cash. Record the entry related to the sale of the factory equipment.
3. On January 1, 2022, when the company changed its corporate strategy, its patent had estimated future cash flows of $210,000 and
a fair value of $190,000. What would the company report on the income statement (account and amount) regarding the patent on
January 1, 2022?
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req la
Req 1b
Req 2
Req 3
Prepare a partial depreciation schedule of office equipment for 2019, 2020, and 2021. (Do not round intermediate
calculations.)
Depreciation
Expense
Accumulated
Net Book
Year
Depreciation
Value
2019
$
60,000
2020
2021
< Req 1a
Req 1b
>
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education