Jan. 1 Balance 158,400 July 31 Purchase of equipment 69,500 227,900 Sept. 2 Purchase of equipment 54,100 282,000 Nov. 10 Cost of equipment sold 50,800 231,200 Accumulated Depreciation-Equipment Date Debit Credit Balance Jan. 1 Balance 71,200 Nov. 10 Accumulated depreciation on equipment sold 16,500 54,700 Dec. 31 Depreciation for year 24,900 79,600 Date Jan. 1 Balance Aug. 23 Dividends (cash) Dec. 31 Net income Retained Earnings Debit Credit Balance 104,800 17,100 87,700 68,000 155,700 From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of plant assets was $8,800. (Show amounts that decrease cash flow with either a-sign e.g. -15,000 or in parenthesis e.g. (15,000).) CRANE CORP Statement of Cash Flows (Partial) - Indirect Method Adjustments to reconcile net income to
Jan. 1 Balance 158,400 July 31 Purchase of equipment 69,500 227,900 Sept. 2 Purchase of equipment 54,100 282,000 Nov. 10 Cost of equipment sold 50,800 231,200 Accumulated Depreciation-Equipment Date Debit Credit Balance Jan. 1 Balance 71,200 Nov. 10 Accumulated depreciation on equipment sold 16,500 54,700 Dec. 31 Depreciation for year 24,900 79,600 Date Jan. 1 Balance Aug. 23 Dividends (cash) Dec. 31 Net income Retained Earnings Debit Credit Balance 104,800 17,100 87,700 68,000 155,700 From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal of plant assets was $8,800. (Show amounts that decrease cash flow with either a-sign e.g. -15,000 or in parenthesis e.g. (15,000).) CRANE CORP Statement of Cash Flows (Partial) - Indirect Method Adjustments to reconcile net income to
Chapter1: Financial Statements And Business Decisions
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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.
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