On January 1, Year 1, Finger Company purchased equipment for $172,000. Finger uses straight-line depreciation and estimates an eight-year useful life and a $12,000 salvage value. On December 31, Year 5, Finger sells the equipment for $60,000. In recording this sale, Finger should reflect: Select one: O A. A $6,000 loss O B. A $24,000 loss C. A $12,000 loss D. No gain or loss O ▸

On January 1, Year 1, Finger Company purchased equipment for $172,000. Finger uses straight-line depreciation and estimates an eight-year useful life and a $12,000 salvage value. On December 31, Year 5, Finger sells the equipment for $60,000. In recording this sale, Finger should reflect: Select one: O A. A $6,000 loss O B. A $24,000 loss C. A $12,000 loss D. No gain or loss O ▸

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

On 1/1/23, Dugout Co buys a piece of equipment for $512,000. It is estimated that the equipment will have a salvage value of $80,000 at the end of its expected useful life of 8 years. REQUIREMENTS: 1. Prepare a depreciation schedule using the following methods: a. Straight-line (SL) b. Sum-of-the-years'-digits (SYD) c. Declining balance - 200% (DDB) 2. Assume that the original purchase was made on 5/1/23. Using the "exact" method, determine the yearly depreciation expense for the following depreciation methods: a. SL b. SYD c. DDB What would the "Half-Year" convention look like for SL? 3. Assume that in 2026, it is discovered that the original purchase (on 1/1/23) was expensed rather than capitalized. Give JE's, ignoring the tax effects, required during 2026 if the DDB method is used. 4. Assume that in 2027, the estimated salvage value is decreased by $45,000 and the expected useful life is changed to a total of 9 years from date of purchase (1/1/23). Prepare depreciation schedules for…
Mario Ltd purchased a machine for GHS 50,000 on 1 January 20X1. The machine was judged to have a five-year life with a residual value of GHS 5,000. During 20X3, the market for the product declined and the machine was sold on 1 January 20X4 for GHS 7,000. According to IAS 16 Property, Plant and Equipment, what was the loss on disposal? A. GHS 27,000 B. GHS 13,000 C. GHS 16,000 D. GHS 23,000
Peavey Enterprises purchased a depreciable asset for $25,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,600, what will be the amount of accumulated depreciation on this asset on December 31 Year 3? Multiple Choice О $5,600 $22,400 $18,667 $15,400 О $4,667
An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record: Multiple Choice O O O Neither a gain or loss is recognized on this type of transaction. A gain on sale of $2,000. A loss on sale of $1,000. A gain on sale of $1,000. A loss on sale of $2,000.
Ronny’s Red Hat Company purchased machinery on August 3, Year 1 for $150,000. Ronny, the owner, estimated that the machinery would be sold for $30,000 in 10 years. If Ronny’s red Hat Company uses straight line depreciation, what is included in the entry to record the disposition of the asset on July 31, Year 3 if the machinery is sold for $120,000 cash? Multiple Choice Dr. Loss on disposition $6,000 Cr. Gain on disposition $4,000 Dr. loss on disposition $4,000 Cannot be determined with the data provided Dr. Loss on disposition $2,500
On January 1, Year 1, Hills purchased equipment for $350,000. The equipment had an estimated useful life of ten years and an estimated residual value of $50,000. Use the double-declining-balance method to answer the following question(s). 35. 1. How much depreciation should Hills record on the asset in year 1? a. $35,000 b. $30,600 c. $60,000 d. $70,000 2. How much depreciation should Hills record on the asset in year 2? a. $16,000 b. $24,000 c. $56,000 d. $48,000
Murphy Limited purchased a $30,000 asset with a five‐year life expectancy and no salvage value. Two alternative methods of calculating depreciation expense are presented below.Method A Method BYear1 $3,000 $6,0002 6,000 9,6003 ? ?Required:1. Identify the method of depreciation and compute the depreciation expense for the third year under each method.2. The chief financial officer of Murphy considers depreciation to be nothing more than an arbitrary calculation, based on unreliable estimates. She proposes to use method B for years 1 and 2 and method A for years 3, 4, and 5. In this way, she can deduct the maximum depreciation each year over the life of the asset. Is her proposal acceptable? Why or why not?3. What factors should be considered in choosing a method ofdepreciation?
Noah Corp., a calendar year-end company, purchased equipment on 1/1/X1 with the following attributes: Cost $ 25,000 Salvage Value $ 2,000 Useful life 4 years Assuming that Duncan uses the double-declining balance (DDB) depreciation method, answer the following question:Question: How much depreciation expense should be recorded in 20X4 (year four of the asset's life)? Answer- $ ___
A. A vehicle which cost Rs. 1200,000 had an estimated useful life of 5 years and an estimated residual (salvage) value of Rs. 400,000. Straight-line depreciation was used. Give the entry (in general journal form) required in each of the following alternative assumptions for Easy Corporation: i The vehiele was sold for cash of Rs. 800,000 after 2 years' use. ii. The vehicle was traded in after 3 years on another vehicle with a fair market value of Rs. 1700,000. Trade in allowance was Rs. 850,000. (Record any implied gain or loss) ii. The vehicle was secrapped after 7 years' use. Since scrap dealers were unwilling to pay anything for the vehicle, it was given to a scrap dealer for his services in removing it. B. If there is a considerable proof that the current market value of a building is more than historical cost and that the increasing trend of market value is carrying on, should depreciation continue to be recorded? Elaborate with assumed values.
2 Blue inc. Purchases and assets for $100,000. The asset has a useful life of ten years and no salvage value. In year 6, Blue inc. sold the assets for $60,000. What is the reported gain or loss for this transaction assuming straight-line depreciation. Gain Loss Gain 20,000
Mahak bought equipment on January 2, 20X4 for 200,000. This equipment had an estimated useful life of five years and a salvage value of 20,000. Depreciation was computed by the 150% declining balance method. The accumulated depreciation balance at December 31, 20X5 should be: a.98,000 ,b.102,000, c.91,800, d. 72,000
Sheffield Corporation purchased equipment on January 1, Year 1 for $105,000. Sheffield used the straight-line method of depreciation with a $22,000 salvage value and a useful life of 5 years. On January 1, Year 3 Sheffield sold this equipment for $77,000. Required: Calculate the gain or loss Sheffield should recognize from this sale. Gain