Computing Depreciation, Net Book Value, and Gain or Loss on Asset Sale Lynch Company owns and operates a delivery van that originally cost $49,400. Lynch has recorded straight-line depreciation on the van for four years, calculated assuming a $5,000 expected salvage value at the end of its estimated six-year useful life. Depreciation was last recorded at the end of the fourth year, at which time Lynch disposes of this van. a. Compute the net book value of the van on the disposal date. $ b. Compute the gain or loss on sale of the van if the disposal proceeds are: Use a negative sign with your answer if the sale results in a loss. 1. A cash amount equal to the van's net book value. $ 2. $22.500 cash. $ 3. $18.500 cash. $

Computing Depreciation, Net Book Value, and Gain or Loss on Asset Sale Lynch Company owns and operates a delivery van that originally cost $49,400. Lynch has recorded straight-line depreciation on the van for four years, calculated assuming a $5,000 expected salvage value at the end of its estimated six-year useful life. Depreciation was last recorded at the end of the fourth year, at which time Lynch disposes of this van. a. Compute the net book value of the van on the disposal date. $ b. Compute the gain or loss on sale of the van if the disposal proceeds are: Use a negative sign with your answer if the sale results in a loss. 1. A cash amount equal to the van's net book value. $ 2. $22.500 cash. $ 3. $18.500 cash. $

Name: Computing Depreciation, Net Book Value, and Gain or Loss on Asset Sal
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Description: Computing Depreciation, Net Book Value, and Gain or Loss on Asset SaleLynch Company owns and operates a delivery van that originally cost $49,400. Lynch has recorded straight-line depreciation on the van for four years, calculated assuming a $5,000

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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Colquhoun International purchases a warehouse for $301,000. The best estimate of the salvage value at the time of purchase was $16,000, and it is expected to be us for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determir that the warehouse will be useful for only another fifteen years. A. Calculate annual depreciation expense for the first four years. $ 171,000 B. Determine the depreciation expense for the final fifteen years of the asset's life. 11,400 X Feedback V Check My Work When revising deprecation schedules, the book value is used as the adjusting base to apply the new changes to when determine the revised yearly depreciation amount. C. Prepare the journal entry for year five. If an amount box does not require an entry, leave it blank. Depreciation Expense 171,000 X Accumulated Depreciation-Warehouse 171,000
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On January 1, 20x0, a company purchased a delivery truck for $30,000. They estimated the useful life of the truck to be 6 years, and the salvage value to be $6,000. On July 1, 20x5, they sold the truck for $7,400. Assuming the company uses straight line depreciation and records depreciation expense monthly, calculate the gain or loss associated with selling the truck.
Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $537,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $45,805. a. What was the depreciation for the first year? Round your answer to the nearest cent. b. Using the rounded amount from Part a in your computation, determine the gain or loss on the sale of the equipment, assuming it was sold at the end of year eight for $94,863. Round your answer to the nearest cent. Enter your answer as a positive amount. c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.
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