Sabel Co. purchased assembly equipment for $364,000 on January
1, 2018. Sabel's financial condition immediately prior to the
purchase is shown in Required B.
The equipment is expected to have a useful life of 280,000
machine hours and a salvage value of $28,000. Actual machine-hour
use was as follows:
|
|
| 2018 |
74,000 |
| 2019 |
79,000 |
| 2020 |
66,000 |
| 2021 |
44,000 |
| 2022 |
18,000 |
|
Required
- Compute the depreciation for each of the five years, assuming
the use of units-of-production depreciation. (Do not round
intermediate calculations.)
|
|
| Years |
Depreciation |
| 2018 |
|
| 2019 |
|
| 2020 |
|
| 2021 |
|
| 2022 |
|
Assume that Sabel earns $238,000 of cash revenue during 2018.
Record the purchase of the equipment and the recognition of the
revenue and the depreciation expense for the first year in a
horizontal statements model. The first event is recorded as an
example. (In the Cash Flow column, use the initials OA to designate
operating activity, IA for investing activity, FA for financing
activity, NC for net change in cash and leave the cell blank to
indicate the element is not affected by the event. Enter any
decreases to account balances with a minus sign.)
|
|
| SABEL CO. |
| Horizontal Statements Model
for 2018 |
|
Balance Sheet |
Income Statement |
|
|
Assets |
|
Stockholders’
Equity |
Revenue |
− |
Expense |
= |
Net Income |
Cash Flow |
| Event |
Cash |
+ |
Book Value of
Equipement |
= |
Common Stock |
+ |
Retained Earnings |
|
− |
|
= |
|
|
|
| Balance |
880,000 |
+ |
|
= |
880,000 |
+ |
|
|
− |
|
= |
|
|
|
| Equipment |
|
+ |
|
= |
|
+ |
|
|
− |
|
= |
|
|
|
| Revenue |
|
+ |
|
= |
|
+ |
|
|
− |
|
= |
|
|
|
| Depreciation |
|
+ |
|
= |
|
+ |
|
|
− |
|
= |
|
|
|
| Balance |
|
+ |
|
= |
|
+ |
|
|
− |
|
= |
|
|
|
Assume that Sabel sold the equipment at the end of the fifth
year for $29,400. Calculate the amount of gain or loss on the
sale.