Financial Accounting
9th Edition
ISBN: 9781259738692
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 12, Problem 12.14E
During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the company’s accounting records:
| From the Income Statement | |
| $ 1,500 | |
| Loss on sale of equipment | 2,300 |
| From the |
|
| Beginning equipment | 82,500 |
| Ending equipment | 72,000 |
| Beginning |
43,000 |
| Ending accumulated depreciation | 41,000 |
No new equipment was bought during the period.
Required:
- 1. For the equipment that was sold, determine its original cost, its accumulated depreciation, and the cash received from the sale. (Use the equipment and accumulated depreciation T-accounts to infer the book value of the equipment sold.)
- 2. Sanchez Company uses the indirect method for the Operating Activities section of the cash flow statement. What amount related to the sale would be added or subtracted in the computation of Net
Cash Flows from Operating Activities? - 3. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Investing Activities?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The Bacon Company acquired new machinery with a price of $13,166 by trading in similar old machinery and paying $11,849.40. The old machinery originally cost $8,904 and had accumulated depreciation of $7,123.20. In recording this transaction, what should Bacon Company record?
a.the new machinery at $11,849.40
b.a loss of $464.20
c.the new machinery at $11,385.20
d.a gain of $464.20
* Your answer is incorrect.
Bramble Company owns equipment that cost $1,026,000 and has accumulated depreciation of $433,200. The expected future net
cash flows from the use of the asset are expected to be $620,000. The fair value of the equipment is $456,000.
Prepare the journal entry, if any, to record the impairment loss. (If no entry is required, select "No entry" for the account titles and enter O for
the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List debit entry before credit
entry.)
Account Titles and Explanation
Accumulated Depreciation - Equipment
Loss on Impairment
eTextbook and Media
List of Accounts
Debit
592800
0
Credit
0
592800
I'm struggling to understand what was the depreciation for this problem and how to accurately journal this transaction
Chapter 12 Solutions
Financial Accounting
Ch. 12 - Prob. 1QCh. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - What are the major categories of business...Ch. 12 - Prob. 5QCh. 12 - Prob. 6QCh. 12 - Prob. 7QCh. 12 - Prob. 8QCh. 12 - Compare the two methods of reporting cash flows...Ch. 12 - Prob. 10Q
Ch. 12 - Prob. 11QCh. 12 - What are noncash investing and financing...Ch. 12 - Prob. 13QCh. 12 - Prob. 1MCQCh. 12 - Prob. 2MCQCh. 12 - Prob. 3MCQCh. 12 - Prob. 4MCQCh. 12 - Prob. 5MCQCh. 12 - Prob. 6MCQCh. 12 - Prob. 7MCQCh. 12 - Prob. 8MCQCh. 12 - Prob. 9MCQCh. 12 - Prob. 10MCQCh. 12 - Prob. 12.1MECh. 12 - Determining the Effects of Account Changes on Cash...Ch. 12 - Prob. 12.3MECh. 12 - Prob. 12.4MECh. 12 - Prob. 12.5MECh. 12 - Prob. 12.6MECh. 12 - Prob. 12.7MECh. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Reporting and Interpreting Cash Flows from...Ch. 12 - Prob. 12.9ECh. 12 - Prob. 12.10ECh. 12 - Prob. 12.11ECh. 12 - Inferring Balance Sheet Changes from the Cash Flow...Ch. 12 - (Chapter Supplement B) Computing and Reporting...Ch. 12 - During the period, Sanchez Company sold some...Ch. 12 - Prob. 12.15ECh. 12 - Prob. 12.16ECh. 12 - Prob. 12.17ECh. 12 - Prob. 12.18ECh. 12 - Prob. 12.19ECh. 12 - Prob. 12.20ECh. 12 - Prob. 12.21ECh. 12 - (Chapter Supplement A) Reporting and Interpreting...Ch. 12 - Prob. 12.23ECh. 12 - Prob. 12.24ECh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - (Chapter Supplement C) Preparing a Statement of...Ch. 12 - Prob. 12.1APCh. 12 - Prob. 12.2APCh. 12 - Prob. 12.3APCh. 12 - Prob. 12.1CONCh. 12 - Prob. 12.1CPCh. 12 - Prob. 12.2CPCh. 12 - Prob. 12.3CPCh. 12 - Prob. 12.4CPCh. 12 - Prob. 12.5CPCh. 12 - Prob. 12.6CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A machine with a cost of $176,000 and accumulated depreciation of $108,000 is sold for $58,400 cash. The amount of the loss related to the sale of this machine should be reported in the operating section under the indirect method is: $86,900. $9,600. $14,100. $28,500. $5,840.arrow_forward(a) Sheridan Company retires its delivery equipment, which cost $47,790. Accumulated depreciation is also $47,790 on this delivery equipment. No salvage value is received. (b) Assume the same information as in part (a), except that accumulated depreciation for the equipment is $37,660 instead of $47,790. No. Account Titles and Explanation (a) Accumulated Depreciation-Equipment Equipment (b) Accumulated Depreciation-Equipment Loss on Disposal of Plant Assets Equipment Debit Credit Iarrow_forwardEquipment was acquired at the beginning of the year at a cost of $75,720. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,920. Required: a. What was the depreciation expense for the first year? b. Assuming the equipment was sold at the end of the second year for $57,370, determine the gain or loss on sale of the equipment. c. Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles. Chart of Accounts CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Supplies 119 Prepaid Insurance 120 Land 121 Equipment 122 Accumulated Depreciation 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214…arrow_forward
- Morey, Inc., has the following plant asset accounts: Land, Buildings, and Equipment, with a separate accumulated depreciation account for each of these except Land. Morey completed the following transactions: Jan 4 Traded in equipment with accumlated depreciation of $64,000 (cost of $134,000) for similar new equipment with a cash cost of $175,000. Recieved a trade-in allowance of $72,000 on the old equipment and paid $103,000 in cash. Jan 29 Sold a building that had a cost of $650,000 and had accumulated depreciationof $140,000 through December 31 of the preceding year. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $220,000. Morey received $125,000 cash and a $379,625 note receivable. Oct 30 Purchased land and a building for a single price of $360,000 cash. An independent appraisal valued the land at $160,800 and the building at $241,200. Dec 31 Recorded depreciation as follows: Equipment has an expected…arrow_forwardBlanket Corporation sold equipment for cash of $41,000. Accumulated depreciation on the sale date amounted to $35,000 and a loss of $1,600 was recognized on the sale. What was the original cost of the asset?arrow_forwardA financial analyst is studying the income statement eff ect of two alternative depreciationmethods for a recently acquired piece of equipment. She gathers the following information about the equipment’s expected production life and use:Year 1 Year 2 Year 3 Year 4 Year 5 TotalUnits of production 2,000 2,000 2,000 2,000 2,500 10,500Compared with the units-of-production method of depreciation, if the company uses thestraight-line method to depreciate the equipment, its net income in Year 1 will most likely be:A. lower.B. higher.C. the samearrow_forward
- Novak Corp., a small company that follows ASPE, owns machinery that cost $925,000 and has accumulated depreciation of $385,000. The undiscounted future net cash flows from the use of the asset are expected to be $513,000. The equipment's fair value is $440,000. Using the cost recovery impairment model, prepare the journal entry, if any, to record the impairment loss. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Creditarrow_forwardEquipment was acquired at the beginning of the year at a cost of $78,660. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,920. Required: (a) What was the depreciation expense for the first year? (b) Assuming the equipment was sold at the end of the second year for $59,486, determine the gain or loss on sale of the equipment. (c) Journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTSGeneral Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 121 Equipment 122 Accumulated Depreciation 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable…arrow_forward> Equipment was acquired at the beginning of the year at a cost of $77,880. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,500. a. What was the depreciation expense for the first year? b. Assuming the equipment was sold at the end of the second year for $58,800, determine the gain or loss on the sale of the equipment. c. Journalize the entry for the sale. If an amount box does not require an entry, leave it blank. ?arrow_forward
- Need help with this questionarrow_forwardEquipment was acquired at the beginning of the year at a cost of $612,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $44,360. a. What was the depreciation for the first year? Round your answer to the nearest cent. 63,127 b. Using the rounded amount from Part a in your computation, determine the gain(loss) on the sale of the equipment, assuming it was sold at the end of year eight for $102,987. Round your answer to the nearest cent and enter as a positive amount. $4,517 Loss c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.arrow_forwardEquipment was acquired at the beginning of the year at a cost of $79,140. The equipment was depreciated using the straight-line method based on an estimated useful life of six years and an estimated residual value of $7,920. a. What was the depreciation expense for the first year?$ b. Assuming the equipment was sold at the end of the second year for $59,800, determine the gain or loss on sale of the equipment.$ c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Accounting for Derivatives_1.mp4; Author: DVRamanaXIMB;https://www.youtube.com/watch?v=kZky1jIiCN0;License: Standard Youtube License
Depreciation|(Concept and Methods); Author: easyCBSE commerce lectures;https://www.youtube.com/watch?v=w4lScJke6CA;License: Standard YouTube License, CC-BY