On April 30, Year 1, Tilton Products purchased machinery for $44,000. The machinery is expected to have an 8-year life and an estimated residual value of $4,000. Tilton uses a calendar year-end for financial reporting. Refer to the information above. In Year 7, Tilton Products sells this machinery for $2,000. At the date of sale, the machinery had been depreciated by Tilton Products to its estimated residual value of $4,000. This sale results in Multiple Choice No gain or loss in either the financial statements or the income tax return. A $2,000 loss in the financial statements; a $2.000 gain in the income tax return. A $2,000 loss in both the company's financial statements and its income tax return A $2,000 loss in the financial statements, but no gain or loss in the income tax return.

On April 30, Year 1, Tilton Products purchased machinery for $44,000. The machinery is expected to have an 8-year life and an estimated residual value of $4,000. Tilton uses a calendar year-end for financial reporting. Refer to the information above. In Year 7, Tilton Products sells this machinery for $2,000. At the date of sale, the machinery had been depreciated by Tilton Products to its estimated residual value of $4,000. This sale results in Multiple Choice No gain or loss in either the financial statements or the income tax return. A $2,000 loss in the financial statements; a $2.000 gain in the income tax return. A $2,000 loss in both the company's financial statements and its income tax return A $2,000 loss in the financial statements, but no gain or loss in the income tax return.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Crane Corporation uses straight-line depreciation, prepares adjusting entries annually, and has a December 31 year end. It purchased equipment on January 1, 2020, for $196,400. The equipment had an estimated useful life of five years and a residual value of $20,440. On December 31, 2021, the company tests for impairment and determines that the equipment's fair value is $95,600. (a) Your answer has been saved. See score details after the due date. Assuming annual depreciation has already been recorded at December 31, calculate the equipment's carrying amount at December 31, 2021, immediately after recording depreciation for the year. (b) Carrying amount $ 126016 Calculate the amount of the impairment loss, if any. Impairment loss $ Attempts: 1 of 1 used W
Alexander Company purchased a piece of equipment for $12,000 and depreciated it for three years over a five-year estimated life with an expected residual value at the end of five years of $2,000. At the end of the third year, Alex decided to upgrade to equipment with increased capacity and sold the original piece of equipment for $7,200. Calculate the gain or loss on the disposal at the end of the third year.
Martinez Company owns a building that appears on its prior year-end balance sheet at its original $572,000 cost less $429,000 accumulated depreciation. The building is depreciated on a straight-line basis assuming a 20-year life and no salvage value. During the first week in January of the current calendar year, major structural repairs are completed on the building at a $68,350 cost. The repairs extend its useful life for 5 years beyond the 20 years originally estimated. 1. Determine the building's age (plant asset age) as of the prior year-end balance sheet date. 2. Prepare the entry to record the cost of the structural repairs that are paid in cash. 3. Determine the book value of the building immediately after the repairs are recorded. 4. Prepare the entry to record the current calendar year's depreciation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the building's age (plant asset age) as of the prior…
On July 2, 2013, Sable Company purchased a building for $300,000 that had an estimated residual value of $46,000 and an expected useful life of ten years. Sable Company has a December 31st, year end. If Sable Company uses the Declining Balance Method at the straight-line rate, the depreciation expense for year two is: $27000, $28500, $25400, $30000, or none of the above
Accounting Allie deposits money into her savings account each month. The table shows the balance in the account for the corresponding month. Time (months ) 8 10 12 14 Money (dollars ) 350 410 470 530 How much money was in Allie's account before she started making monthly depositsdeposits?
Oriole Company purchased equipment that cost $2595000 on January 1, 2020. The entire cost was recorded as an expense. The equipment had a 9-year life and a $103800 residual value. Oriole uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2022. Oriole is subject to a 30% tax rate. Oriole’s net income for the year ended December 31, 2020, was understated by $2595000. $2318200. $1816500. $1622740.
Sage Ltd. owned several manufacturing facilities. On September 15 of the current year, Sage decided to sell one of its manufacturing buildings. The building had cost $6,325,000 when originally purchased 5 years ago, and had been depreciated using the straight-line method with no residual value. Sage estimated that the building had a 25-year life when purchased. Prepare the journal entry to record the sale of the building on Sage's books, assuming 5 years of depreciation has already been recorded in the accounts to the date of disposal. The building was sold for $5,250,000 cash. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Sept. 15 List of Accounts…
On 1/1/18, Cumberland Corp. purchased a machine for $60,000. The machine cost Cumberland $2,800 for delivery. At the end of 10 years, Cumberland expects to sell the machine for $2,000. Compute depreciation expense for 2019 using the double declining balance method:
Marigold Company owns equipment that cost $79,000 when purchased on January 1, 2019. It has been depreciated using the straight-line method based on an estimated salvage value of $7,900 and an estimated useful life of 5 years. Depreciation expense adjustments are recognized annually. Instructions: Prepare Marigold Company's journal entries to record the sale of the equipment in these four independent situations. Update depreciation on assets disposed of at time of sale. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) (a) (b) (c) (d) (e) (A) SR. Account Titles and Explanation (a) (b) Sold for $45,000 on January 1, 2022. Sold for $45,000 on April 1, 2022. Sold for $17,000 on January 1, 2022. Sold for $17,000 on September 1, 2022 Repeat (a), assuming Marigold uses double-declining balance…
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…
The Donut Stop acquired equipment for $18,000. The company uses straight-line depreciation and estimates a residual value of $3,600 and a four-year service life. At the end of the second year, the company estimates that the equipment will be useful for four additional years, for a total service life of six years rather than the original four. At the same time, the company also changed the estimated residual value to $1,500 from the original estimate of $3,600. Required: Calculate how much The Donut Stop should record each year for depreciation in years 3 to 6.
On January 2, 2021, Archer Company, a skateboard manufacturer, installed a computerized machine in its factory at a cost of $168,000. The machine's useful life was estimated at four years or a total of 190,000 units with a $35,000 trade - in value. Archer Company's year-end is December 31. Calculate depreciation for each year of the machine's estimated useful life under each of the following methods: (Do not round intermediate calculations.) Straight-line Double - declining - balance Units -of- production, assuming actual units produced were: Year 2021 2022 2023 2024 Units 39,900 43,550 54,200 72,000