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Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 47P
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3. On January 1, 2020, ABC Company sells office furniture for €80,000 cash. The office
furniture originally cost €200,000 when purchased on January 1, 2013. Depreciation is
recorded by the straight-line method over 10 years with a residual value of €20,000. What gain
is recognized on the sale?
A) €24,000
B) €12,000
C) €6,000
D) €12,667
4. ABC Company purchased a tow truck for €225,000 on January 1, 2019. It was originally
depreciated on a straight-line basis over 10 years with a residual value of €45,000. On
December 31, 2021, before adjusting entries had been made, the company decided to change
the remaining estimated life to 4 years (including 2021) and the residual value to €7,500. What
was the depreciation expense for 2021?
A) €45,375
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