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12/31/2017 12/31/2016 Equipment $813,000 (2017) $733,000 (2018) Accumulated Depr

ID: 2525440 • Letter: 1

Question

12/31/2017

12/31/2016

Equipment

$813,000 (2017)

$733,000 (2018)

Accumulated Depreciation

491,000 (2017)

476,000 (2018)

Book Value

$322,000 (2017)

$257,000 (2018)

The following information is taken from Ward Company's records:

Equipment was purchased during 2017 for $150,000 cash.

A gain on sale of equipment of $7,000 was recorded during 2017.

Equipment was sold during 2017 for $52,000.

Compute the amount of depreciation expense for 2017.

Ward Company had the following excerpt from its financial records:

12/31/2017

12/31/2016

Equipment

$813,000 (2017)

$733,000 (2018)

Accumulated Depreciation

491,000 (2017)

476,000 (2018)

Book Value

$322,000 (2017)

$257,000 (2018)

The following information is taken from Ward Company's records:

Equipment was purchased during 2017 for $150,000 cash.

A gain on sale of equipment of $7,000 was recorded during 2017.

Equipment was sold during 2017 for $52,000.

Required:

Compute the amount of depreciation expense for 2017.

Explanation / Answer

Answer:

Cost of Equipment Sold = Equipment, 2017 + Equipment purchased - Equipment, 2018
Cost of Equipment Sold = $813,000 + $150,000 - $733,000
Cost of Equipment Sold = $230,000

Book Value of Equipment sold = Proceed from Sale - Gain on sale
Book Value of Equipment sold = $52,000 - $7,000
Book Value of Equipment sold = $45,000

Depreciation on Equipment Sold = Cost of Equipment Sold - Book Value of Equipment sold
Depreciation on Equipment Sold = $230,000 - $45,000
Depreciation on Equipment Sold = $185,000

Depreciation Expense = Accumulated Depreciation, 2018 + Depreciation on Equipment Sold - Accumulated Depreciation, 2017
Depreciation Expense = $476,000 + $185,000 - $491,000
Depreciation Expense = $170,000

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