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Sloan Company uses its own executive charter plane that originally cost $1,680,000. It has recorded straight-line depreciation on the plane for 10 full years, with a $168,000 expected salvage value at the end of its estimated 14 year useful life. Sloa disposes of the plane at the end of Year 10. a. Determine the following at the disposal date: Accumulated depreciation $ 1080000 x

Sloan Company uses its own executive charter plane that originally cost $1,680,000. It has recorded straight-line depreciation on the plane for 10 full years, with a $168,000 expected salvage value at the end of its estimated 14 year useful life. Sloa disposes of the plane at the end of Year 10. a. Determine the following at the disposal date: Accumulated depreciation $ 1080000 x

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Computing Depreciation, Asset Book Value, and Gain or Loss on Asset Sale FSET Sloan Company uses its own executive charter plane that originally cost $1,680,000. It has recorded straight-line depreciation on the plane for 10 full years, with a $168,000 expected salvage value at the end of its estimated 14 year useful life. Sloan disposes of the plane at the end of Year 10. a. Determine the following at the disposal date: Accumulated depreciation $ 1080000 Net book value $ 600000 b. Using the financial statement effects template, show how the disposal of the plane affects the balance sheet and income statement, assuming that the sales price is: 1. Cash equal to the book value of the plane. 2. $420,000 cash. 3. $1,260,000 cash. Balance Sheet Income Statement Cash Noncash Contra Sale price options Asset Assets Assets Liabilities Contributed Capital Earned Capital Revenues Expenses Net Income 1 42 × 0 × -1120000 X 0 ✓ 0 ✓ 0 ✓ 0 ✓ 2 420000✓ 0 x -1120000 X 0 ✓ 0 0 × 0☑ -140000 X 3 1120000 X 0 × 1120000 X 0✓ 0✓ 0 % 0 × 0 ✓ 0 × -560000 X 560000 X
Transcribed Image Text:Computing Depreciation, Asset Book Value, and Gain or Loss on Asset Sale FSET Sloan Company uses its own executive charter plane that originally cost $1,680,000. It has recorded straight-line depreciation on the plane for 10 full years, with a $168,000 expected salvage value at the end of its estimated 14 year useful life. Sloan disposes of the plane at the end of Year 10. a. Determine the following at the disposal date: Accumulated depreciation $ 1080000 Net book value $ 600000 b. Using the financial statement effects template, show how the disposal of the plane affects the balance sheet and income statement, assuming that the sales price is: 1. Cash equal to the book value of the plane. 2. $420,000 cash. 3. $1,260,000 cash. Balance Sheet Income Statement Cash Noncash Contra Sale price options Asset Assets Assets Liabilities Contributed Capital Earned Capital Revenues Expenses Net Income 1 42 × 0 × -1120000 X 0 ✓ 0 ✓ 0 ✓ 0 ✓ 2 420000✓ 0 x -1120000 X 0 ✓ 0 0 × 0☑ -140000 X 3 1120000 X 0 × 1120000 X 0✓ 0✓ 0 % 0 × 0 ✓ 0 × -560000 X 560000 X
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