1.Calculate the equipment’s accumulated depreciation and carrying amount at the
ID: 2563963 • Letter: 1
Question
1.Calculate the equipment’s accumulated depreciation and carrying amount at the beginning of 2018.
2.What is the amount of the gain or loss that would arise when a quarter of the equipment was sold on January 1, 2018, for cash proceeds of $18,710?
3.What is the depreciation expense for January 1, 2018, to October 31, 2018?
4.On November 1, 2018, the company purchased additional equipment for $10,320 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?
5.On December 31, 2018, the company sold some equipment for a loss of $2,830. After recording the sale, the balances in the Equipment account and Accumulated Depreciation account were $64,040 and $18,393, respectively. Based on this information, what were the proceeds received when this equipment was sold?
On January 1, 2016, Oriole Corporation acquired equipment costing $87,360. It was estimated at that time that the equipment would have a useful life of eight years and no residual value. The company uses the straight-line method of depreciation for its equipment, and its year end is December 31Explanation / Answer
Answer 1 Depreciation per year using straight line method = $87360 / 8 years = $10,920 The equipment’s accumulated depreciation at the beginning of 2018 = $10920 * 2 = $21,840 The carrying amount at the beginning of 2018 = $87360 - $21840 = $65520 Answer 2 Calculation of gain or loss when a quarter of the equipment was sold on January 1, 2018 Cash proceeds from Sale $18,710 Less : Carrying value of quarter of equipment on Jan.1,2018 ($65520/4) $16,380 Gain on Sale $2,330 Answer 3 The depreciation expense for January 1, 2018, to October 31, 2018 Depreciation per year $10,920 Less : 1/4 for sold part of equipment $2,730 Balance Depreciation on old equipment for 2018 for 12 months $8,190 Depreciation expense for January 1, 2018, to October 31, 2018 $6,825 Answer 4 Depreciation per year for additional equipment = $10320 / 8 years = $1290 The depreciation for the two months ending December 31, 2018 Depreciation on old equipment for 2 months = ($8190/12)*2 = $1,365 Depreciation on additional equipment for 2 months = ($1290/12)*2 = $215 Depreciation for the two months ending December 31, 2018 $1,580 Answer 5 Equipment's Gross Book value before sale of part at the end of 2018 Gross Book value of equipment at the beginning of 2018 $87,360 Add : Purchase of additional equipment $10,320 Less : Sale of equipment $16,380 Equipment's Gross Book value before sale of part at the end of 2018 $81,300 Equipment's Accumulated depreciation before sale of part at the end of 2018 Accumulated depreciation at the beginning of 2018 $21,840 Add : Depreciation for 2018 ($6825 + $1580) $8,405 Accumulated depreciation before sale of part at the end of 2018 $30,245 Calculation of the proceeds received when this equipment was sold Carrying value of equipment before sale pf part at the end of 2018 = $81300 - $30245 = $51,055 Less : Carrying value of equipment after the sale pf part at the end of 2018 = $64040 - $18393 = $45,647 Carrying value of equipment sold at the end of 2018 $5,408 Less : Loss on sale of equipment $2,830 Proceeds received when equipment was sold $2,578
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