### Assignment 1**Scenario:**Un Company sold office equipment with a cost of $38,520 and accumulated depreciation of $33,456 for $6,620.**Required:**a. What is the book value of the asset at the time of sale?b. What is the amount of gain or loss on the disposal?c. How would the sale affect net income (increase, decrease, no effect) and by how much?d. How would the sale affect the amount of total assets shown on the balance sheet (increase, decrease, no effect) and by how much?e. How would the event affect the statement of cash flows (inflow, outflow, no effect) and in what section?---**Response Format:**| **a.** | **Book value** | ||----------|------------------------------------------------|-----------------------------------------|| **b.** | **Gain (loss) on sale** | || **c.** | **Net income would** | **by** || **d.** | **Total assets would** | **by** || **e.** | **Effect** | **Section** |---**Detailed Explanation:**1. **Book Value Calculation:** - **Book Value** = Original Cost - Accumulated Depreciation - Original Cost: $38,520 - Accumulated Depreciation: $33,456 - **Book Value** = $38,520 - $33,456 = $5,0642. **Gain or Loss on Sale:** - **Gain (Loss) on Sale** = Sale Price - Book Value - Sale Price: $6,620 - Book Value: $5,064 - **Gain (Loss) on Sale** = $6,620 - $5,064 = $1,556 (Gain)3. **Impact on Net Income:** - Since there is a gain from the sale of the equipment, net income would **increase** by $1,556.4. **Impact on Total Assets:** - Total assets would **increase** by the sale price of $6,620 and decrease by the book value of $5,064. - Net effect on total assets = $6,620 - $5,064 = $1

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Un Company sold office equipment with a cost of $38,520 and accumulated depreciation of $33,456 for $6,620. Required a. What is the book value of the asset at the time of sale? b. What is the amount of gain or loss on the disposal? c. How would the sale affect net income (increase, decrease, no effect) and by how much? decrease no effect) and by h

Un Company sold office equipment with a cost of $38,520 and accumulated depreciation of $33,456 for $6,620. Required a. What is the book value of the asset at the time of sale? b. What is the amount of gain or loss on the disposal? c. How would the sale affect net income (increase, decrease, no effect) and by how much? decrease no effect) and by h

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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