In 2010. Amalfi Inc purchase equipment with an estimated salvage value Amalfi us
ID: 2427645 • Letter: I
Question
In 2010. Amalfi Inc purchase equipment with an estimated salvage value Amalfi uses and OOBveWHW On April 18. 2012. Amalfi its plants and equipment for $33.600 Under these assumptions. compute the following for this equipment Dietz owned a delivery van with a book value of $2,000 It traded this old van in on a new one which cost $16,000'. The dealer allowed Dietz a trade-in allowance of $3,500 on the old van. and Dietz paid the remainder in cash The gain that Diet/should report on its financial statements The amount of cash Diet/has to come up with to buy the new vanExplanation / Answer
CALCULATION OF THE DEPRICIATION WITH OUT SALVAGE CHARGES
Depreciation = Cost of the Equipment / estimated life of the Equipment
= $ 42, 600/10 years
= $ 4,260.00
Suppose purchase of equipment is on 03/01/2010 straight line depreciation using half year convention
Year Cost of equipment Depreciation amount Book Value
2010 42,600.00 2,130.00 40,470.00
2011 40,470.00 4,260.00 36,210.00
2011 36,210.00 4,260.00 31,950.00
2012 31,950.00 4,260.00 27, 690.00
Gain or Loss on sale of equipment :
Accumulated Depreciation on equipment from Jan 2010 $ to April 2012
$ 4,260 x 2.4 years = $ 10,224.00
So, the book value was $ 42,6000 – $ 10,224.00 = $ 32,376.00
And they sold it for $ 33, 600.00
= 33,600.00 - 32, 376.00
= 1,224.00 is gain on sale of equipment
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.