Problem 9-5A a-e On January 1, 2016, Blossom Corporation acquired equipment cost
ID: 2561178 • Letter: P
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Problem 9-5A a-e On January 1, 2016, Blossom Corporation acquired equipment costing $70,680. It was estimated at that time that the cquipment would have a ucaful life of cight years and no residual valua. The company uses the straight-ine mathod of depreciation for its equipment, and its yoar end is December 31. ation a Caloulate the equipment's accumulated depreciation and carrying amount at the beginning of 2018 Equipmant's accumu Carrying amount SHOW SOLUTION what is the amount of the gain or loss that would arise when quarter of the equipment was sold on January 1, 2018, for cash proceeds of $18,140? from sale of equipment $ What is the depreciation expensc for January 1, 2018, to October 31, 2018? Depreciation expense s SHOW SOLUTION On November 1, 2018, the company purchased additional equipment for 9,600 that also had a useful life of eight years and no residual value. What is the depreciation for the two months ending December 31, 2018? Total depreciation for 2 months SHOW SOLUTION on this informetion On December 31, 2018, the company sold some equipment for a loss of $2,950. After recording the sale, the balarces in the Equipment account and Accumulated Depreciation account were $57,760 and $16,326, respectively. Based on this information, what were the proceeds received when this equipment was sold? Cash proceeds from saleExplanation / Answer
Equipments accumulated depreciation= Depreciation per year*No of years of purchase
Depreciation per year= cost-salvage value /usefule life= 79680/8= 9960 per year
Equipments accumulated depreciation= 9960*2= 19920
carrying amount at the beginning of 2018= Cost- accumulated depreciation= 79680-19920= 59760
Gain or loss on sale of quarter of the equipment= Sale proceeds+accumulated depreciation- cost
=18140+19920/4 -79680/4= 3200 gain
Depreciation expense from Jan1,2018 to Oct31, 2018:
Number of months= 10
Carrying value(3/4 of equipment left) at Jan1,2018= 59760*3/4= 44820
Depreciation for full year= 9960*3/4= 7470
Depreciation for 10 months= 7470*10/12= 6225
Depreciation expense for two months ending Dec31, 2018:
Depreciation on original equipment for two months= 7470*2/10= 1245
Depreciation on new equipment= 9600/8 *2/12= 200
Total depreciation expense for two months= 1245+200= 1445
Cash proceeds from sale:
First equipment(3/4) Second equipmnet Balance before sale Balance after sale Disposed amounts Cost 59760 9600 69360 57760 11600 Acc dep 22410 200 22610 16326 6284 Net block 37350 5316 Less: loss -2950 Cash proceeds 2366Related Questions
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