Use the following information for the next 5 questions:
On January 1, 2008, KA Company purchased equipment for$105,000. The estimated useful life of the equipment is10 years, during which time it will be produce 100,000units. Estimated residual value is$5,000. KAâs fiscal year is January 1 to December31.
If KA Company uses the straight-line methodof depreciation, thenet book valueof the asset at the end of the secondyear willbe:
If KA Company uses the units methodof depreciation and produced30,000 units in the first year, the depreciation expensefor thefirstyear will be:
If KA Company uses the double-declining-balance methodofdepreciation, the balance in accumulated depreciationat the end ofthe second year will be:
4.If he company should recognizea:
a. $70,000 loss on the sale
b. $35,000 gain on the sale
c. $10,000 gain on the sale
d. $10,000 loss on the sale
e.None of the above.
Assume KA Company purchased the equipment on July 1, 2008. Whatis the net book valueof the equipment on December 31, 2010, afteradjusting entries, if KA Company uses the straight-line methodofdepreciation?
Use the following information for the next 5 questions:
On January 1, 2008, KA Company purchased equipment for$105,000. The estimated useful life of the equipment is10 years, during which time it will be produce 100,000units. Estimated residual value is$5,000. KAâs fiscal year is January 1 to December31.
If KA Company uses the straight-line methodof depreciation, thenet book valueof the asset at the end of the secondyear willbe:
If KA Company uses the units methodof depreciation and produced30,000 units in the first year, the depreciation expensefor thefirstyear will be:
If KA Company uses the double-declining-balance methodofdepreciation, the balance in accumulated depreciationat the end ofthe second year will be:
4.If he company should recognizea:
a. $70,000 loss on the sale
b. $35,000 gain on the sale
c. $10,000 gain on the sale
d. $10,000 loss on the sale
e.None of the above.
Assume KA Company purchased the equipment on July 1, 2008. Whatis the net book valueof the equipment on December 31, 2010, afteradjusting entries, if KA Company uses the straight-line methodofdepreciation?
Related questions
Sale of Equipment
Equipment was acquired at the beginning of the year at a cost of $38,500. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of ten years and an estimated residual value of $750.
a. What was the depreciation for the first year?
$
b. Assuming the equipment was sold at the end of year 2 for $9,480, determine the gain or loss on the sale of the equipment.
$ Loss
Feedback
Book value is the asset cost minus accumulated depreciation. In the first year, the balance in the accumulated depreciation account is zero.
Compare the book value to the sale price. If the book value is more than the sale price, the equipment was sold for a loss. If the book value is less than the sale price, the equipment was sold for a gain.
Learning Objective 3.
c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
| Cash | |||
| Accumulated Depreciation-Equipment | |||
| Loss on Sale of Equipment | |||
| Equipment |
Feedback
Be sure to record the selling price of the fixed asset. If the company no longer has the fixed asset what account(s) would need to be eliminated? Was there a gain or a loss on the sale?
