Question

Rock Company purchased manufacturing equipment for $500,000 on April 1, 2012. The estimated salvage value is...

Rock Company purchased manufacturing equipment for $500,000 on April 1, 2012. The estimated salvage value is $50,000, and the estimated total useful life is 5 years. The straight-line method is used for depreciation. What is the gain or loss on sale if the asset was sold for $215,000 on May 1, 2015?

a.   $75,000 gain

b.   $15,000 gain

c.   $ 7,500 gain

d.   $ 7,500 loss

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:- The loss on sale if the asset was sold for $215,000 on May 1, 2015:-

=$7500 loss (Option d).

Explanation:-

Straight line Method:-

= Cost of asset- Salvage value of asset/No. of useful life (years)

=($500000-$50000)/5 years

=$450000/5 years = $90000

Year 2012 depreciation =($90000*9 months)/12 months =$67500

Book value at Year 2012 =$500000-$67500=$432500       

Year 2013 depreciation =$90000

Book value at Year 2013 =$432500-$90000=$342500

Year 2014 depreciation =$90000

Book value at Year 2014 =$342500-$90000=$252500

Year 2015 depreciation =($90000*4 months)/12 months =$30000

Book value at May 1, 2015 =$252500-$30000=$222500

Loss on sale of equipment =Sale value of equipment- Book value of equipment on May1,2015= $215000-$222500

= -$7500

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Lexis Company purchased equipment on January 1, 2012 for $35,500. The estimated useful life of the...
Lexis Company purchased equipment on January 1, 2012 for $35,500. The estimated useful life of the equipment was 7 years and the estimated residual value was $4,000. After using the straight-line method of depreciation for 3 years, the estimated useful life was revised to 9 years on January 1, 2015. How much is depreciation expense for 2015? A) $2,444 B) $3,000 C) $2,000 D) $3,667
(a)    Brown Company purchased equipment in 2008 for $150,000 and estimated a $10,000 salvage value at...
(a)    Brown Company purchased equipment in 2008 for $150,000 and estimated a $10,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2014, there was $98,000 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2015, the equipment was sold for $40,000.         Indicate the accounts that are increased and/or decreased to remove the equipment from the books of Brown Company on March 31, 2015. (b)    Finney...
Trainor Corporation purchased equipment at a cost of $500,000. The equipment has an estimated residual value...
Trainor Corporation purchased equipment at a cost of $500,000. The equipment has an estimated residual value of $50,000 and an estimated life of 5 years, or 10,000 hours of operation. The equipment was purchased on January 1, 2020 and was used 2,500 hours in 2020 and 2,100 hours in 2021. On January 1, 2022, the company decided to sell the equipment for $315,000. Trainor Corporation uses the units-of- production method to account for the depreciation on the equipment. Based on...
A company purchased factory equipment on April 1, 2018 for $166000. It is estimated that the...
A company purchased factory equipment on April 1, 2018 for $166000. It is estimated that the equipment will have a $18000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2018 is
On January 1, 2016, Sparks Company purchased for $360,000 snow-making equipment having an estimated useful life...
On January 1, 2016, Sparks Company purchased for $360,000 snow-making equipment having an estimated useful life of 8 years with an estimated salvage value of $25,000 and 500,000 units expected to be produced. Depreciation is taken for the portion of the year the asset is used. (a) Complete the form below by determining the depreciation expense and year-end book values of 2015 and 2016 using the 1. Straight Line Method 2. Production assuming 50,000 units produced in 2016 and 60,000...
Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to...
Marks Consulting purchased equipment costing $45,000 on January 1, Year 1. The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years. Straight-line depreciation is used. If the equipment is sold on July 1, Year 5 for $20,000, the journal entry to record the sale will include a: Select one: a. Debit to accumulated depreciation for $22,500. b. Credit to loss on sale for $10,000. c. Credit to cash for $20,000. d....
An asset was purchased for $140,000. It had an estimated salvage value of $35,000 and an...
An asset was purchased for $140,000. It had an estimated salvage value of $35,000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $28,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in Year 6 would be 11900. explain how
1.   Presto Company purchased equipment and these costs were incurred: Cash price $65,000 Sales taxes 3,600...
1.   Presto Company purchased equipment and these costs were incurred: Cash price $65,000 Sales taxes 3,600 Insurance during transit 640 Installation and testing  860 Total costs $70,100 Presto will record the acquisition cost of the equipment as a. $65,000. b. $68,600. c. $69,240. d. $70,100. 2. A company purchased factory equipment on April 1, 2015 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method...
On January 1, 2012, the company purchased equipment for $600,000. The equipment has a 20-year expected...
On January 1, 2012, the company purchased equipment for $600,000. The equipment has a 20-year expected useful life and $0 residual value. Initially, the company used double-declining balance depreciation. On January 1, 2015, the company changed to straight-line depreciation. The expected useful life was reduced from 20 to 15 years. The residual value was unchanged. Compute depreciation expense for 2015. Ignore income taxes.
A firm owns a piece of equipment that it originally purchased for $250,000. The residual value...
A firm owns a piece of equipment that it originally purchased for $250,000. The residual value is $25,000, the firm uses straight line depreciation, and the useful life is 20 years. The firm purchased the equipment on the first day of year one and sold it on the last day of year 15 for $75,000. What is the gain or loss on the sale? A. $11,250 Gain B. $6,250 Loss C. $12,500 Loss D. $75,000 Gain E. $81,250 Loss
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT