Disposal of Fixed Asset Equipment acquired on January 8, 20Y1, at a cost of $607,500, has an estimated useful life of 17 years and an estimated residual value of $72,900. a. What was the annual amount of depreciation for the years 20Y1, 20Y2, and 20Y3, using the straight-line method of depreciation? Round annual depreciation to the nearest dollar and use this amount in your Depreciation expense 20Y1 31,447 V 20Y2 31,447 V 20Υ3 31,447 V b. What was the book value of the equipment on January 1, 20Y4? For decreases in accounts or outflows of cash, enter your answers as negative numbers. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box c. Assuming that the equipment was sold on January 7, 20Y4, for $151,875, illustrate the effects on the accounts and financial statements of the sale. Balance Sheet Statement of Income Assets Liabilities + Stockholders' Equity Cash Flows Statement Cash v Equipment Accumulated depreciation - equipment v No effect Retained earnings |151,875. V Jan. 7. Statement of Cash Flows Income Statement Investing v 151,875 Loss on disposal of fixed assets v d. Assuming that the equipment was sold on January 7, 20Y4, for $729,000 instead of $151,875, illustrate the effects on the accounts and financial statements of the sale. Balance Sheet Statement of Income Assets Liabilities + Stockholders' Equity Cash Flows Statement Cash v + Equipment V Accumulated depreciation - equipment No effect v Retained earnings %3D 729,000. 215,841 Jan. 7. Statement of Cash Flows Income Statement Investing 729,000. V Gain on disposal of fixed assets v 215,841
Disposal of Fixed Asset Equipment acquired on January 8, 20Y1, at a cost of $607,500, has an estimated useful life of 17 years and an estimated residual value of $72,900. a. What was the annual amount of depreciation for the years 20Y1, 20Y2, and 20Y3, using the straight-line method of depreciation? Round annual depreciation to the nearest dollar and use this amount in your Depreciation expense 20Y1 31,447 V 20Y2 31,447 V 20Υ3 31,447 V b. What was the book value of the equipment on January 1, 20Y4? For decreases in accounts or outflows of cash, enter your answers as negative numbers. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box c. Assuming that the equipment was sold on January 7, 20Y4, for $151,875, illustrate the effects on the accounts and financial statements of the sale. Balance Sheet Statement of Income Assets Liabilities + Stockholders' Equity Cash Flows Statement Cash v Equipment Accumulated depreciation - equipment v No effect Retained earnings |151,875. V Jan. 7. Statement of Cash Flows Income Statement Investing v 151,875 Loss on disposal of fixed assets v d. Assuming that the equipment was sold on January 7, 20Y4, for $729,000 instead of $151,875, illustrate the effects on the accounts and financial statements of the sale. Balance Sheet Statement of Income Assets Liabilities + Stockholders' Equity Cash Flows Statement Cash v + Equipment V Accumulated depreciation - equipment No effect v Retained earnings %3D 729,000. 215,841 Jan. 7. Statement of Cash Flows Income Statement Investing 729,000. V Gain on disposal of fixed assets v 215,841
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Disposal of Fixed Asset
Equipment acquired on January 8, 20Y1, at a cost of $607,500, has an estimated useful life of 17 years and an estimated residual value of $72,900.
a. What was the annual amount of depreciation for the years 20Y1, 20Y2, and 20Y3, using the straight-line method of depreciation? Round annual depreciation to the nearest dollar and use this amount in your foll
Depreciation expense
20Υ1
31,447
20Y2
31,447
20Υ3
31,447
b. What was the book value of the equipment on January 1, 20Y4?
For decreases in accounts or outflows of cash, enter your answers as negative numbers. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box bla
c. Assuming that the equipment was sold on January 7, 20Y4, for $151,875, illustrate the effects on the accounts and financial statements of the sale.
Balance Sheet
Statement of
Income
Assets
Liabilities
+
Stockholders' Equity
Cash Flows
Statement
Cash v
+ Equipment
Accumulated depreciation - equipment v
No effect v
Retained earnings v
Jan. 7.
151,875.
Statement of Cash Flows
Income Statement
Investing v
151,875 V
Loss on disposal of fixed assets v
d. Assuming that the equipment was sold on January 7, 20Y4, for $729,000 instead of $151,875, illustrate the effects on the accounts and financial statements of the sale.
Balance Sheet
Statement of
Income
Assets
Liabilities
Stockholders' Equity
+
Cash Flows
Statement
Cash
v
Equipment V
Accumulated depreciation - equipment V
= No effect
v
Retained earnings v
+
Jan. 7.
729,000.
215,841
Statement of Cash Flows
Income Statement
Investing
729,000.
Gain on disposal of fixed assets v
215,841
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