The T-accounts for Equipment and the related Accumulated Depreciation—Equipment for Luo Company at the end of 2020 are shown here. Equipment Beg. bal. 80,600 Disposals 23,800 Acquisitions 40,000 End. bal. 96,800 Accumulated Depreciation—Equipment Disposals 8,700 Beg. bal. 47,800 Depr. exp. 13,300 End. bal. 52,400 In addition, Luo’s income statement reported a loss on the disposal of plant assets of $6,100. What amount was reported on the statement of cash flows as “cash flow from sale of equipment”? (Show amount that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Cash flow from sale of equipment $
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.
The T-accounts for Equipment and the related
|
Equipment
|
|||
| Beg. bal. |
80,600
|
Disposals |
23,800
|
| Acquisitions |
40,000
|
|
|
| End. bal. |
96,800
|
|
|
|
Accumulated Depreciation—Equipment
|
|||
| Disposals |
8,700
|
Beg. bal. |
47,800
|
|
|
Depr. exp. |
13,300
|
|
|
|
End. bal. |
52,400
|
In addition, Luo’s income statement reported a loss on the disposal of plant assets of $6,100. What amount was reported on the statement of
| Cash flow from sale of equipment |
$
|
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