Traded in old office equipment with book value of $55,000 (cost of $127,000 and accumulated depreciation of $72,000) for new equipment. Mora also paid $70,000 in cash. Fair value of new equipment is $133,000. Assume the exchange had commercial substance. Jan. 1 Apr. 1 Sold equipment that cost $18,000 (accumulated depreciation of $8,000 through December 31 of the preceding year). Mora received $6, 100 cash from the sale of the equipment. Depreciation is computed on a straight- line basis. The equipment has a five-year useful life and a residual value of $0. Dec. 31 Recorded depreciation as follows: Office equipment is depreciated using the double-declining-balance method over four years with a $9,000 residual value.

Traded in old office equipment with book value of $55,000 (cost of $127,000 and accumulated depreciation of $72,000) for new equipment. Mora also paid $70,000 in cash. Fair value of new equipment is $133,000. Assume the exchange had commercial substance. Jan. 1 Apr. 1 Sold equipment that cost $18,000 (accumulated depreciation of $8,000 through December 31 of the preceding year). Mora received $6, 100 cash from the sale of the equipment. Depreciation is computed on a straight- line basis. The equipment has a five-year useful life and a residual value of $0. Dec. 31 Recorded depreciation as follows: Office equipment is depreciated using the double-declining-balance method over four years with a $9,000 residual value.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Question

100%

Journalizing partial-year depreciation and asset disposals and exchanges

During 2018, Mora Corporation completed the following transactions:

Record the transactions in the journal of Mora Corporation.

Traded in old office equipment with book value of $55,000 (cost of
$127,000 and accumulated depreciation of $72,000) for new equipment.
Mora also paid $70,000 in cash. Fair value of new equipment is $133,000.
Assume the exchange had commercial substance.
Jan. 1
Apr. 1 Sold equipment that cost $18,000 (accumulated depreciation of $8,000
through December 31 of the preceding year). Mora received $6, 100 cash
from the sale of the equipment. Depreciation is computed on a straight-
line basis. The equipment has a five-year useful life and a residual value
of $0.
Dec. 31 Recorded depreciation as follows:
Office equipment is depreciated using the double-declining-balance
method over four years with a $9,000 residual value.

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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