Computing Depreciation, asset book value and gain or loss on asset sale Palepu Company owns and operates a delivery van that originally cost $27,200. Straight-line depreciation on the van has been recorded for 3 years, with a $2,000 expected salvage value at the end of its estimated 6 years useful life. Depreciation was last recorded at the end of the third year, at which time Palepu disposes of this van. a. Compute the net book value of the van on the sale date.b. Compute the gain or loss on sale of the van if its sales price is for:1. Cash equal to book value of van2. $15,000 cash3. $12,000 cash

Question
Asked Nov 21, 2019
38 views

Computing Depreciation, asset book value and gain or loss on asset sale
Palepu Company owns and operates a delivery van that originally cost $27,200.
Straight-line depreciation on the van has been recorded for 3 years, with a $2,000 expected salvage value at the end of its estimated 6 years useful life. Depreciation was last recorded at the end of the third year, at which time Palepu disposes of this van.
a. Compute the net book value of the van on the sale date.
b. Compute the gain or loss on sale of the van if its sales price is for:
1. Cash equal to book value of van
2. $15,000 cash
3. $12,000 cash

check_circle

Expert Answer

Step 1

a.

Calculate the net book value of t...

help_outline

Image Transcriptionclose

Net book value Cost -Accumulated depreciation = $27,200-S12,600 = $14,600 Working notes: Calculate Straight-line depreciation. |(Cost-Salvage value) Life years Straight-line depreciation (S27,200-$2,000) 6 years =$4,200 Calculate accumulated depreciation Accumulated depreciation = Straight-line depreciation x Number of years =S4, 200 x3 $12,600

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Using the following facts, determine Jaron’s 2019 taxable income. 1. In November 2017, when his wife...

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and s...

question_answer

Q: On January 1, 2018 Crane Company will acquire a new asset that costs $400,000 and that is anticipate...

A: Calculate the old equipment’s after-tax sales value.

question_answer

Q: Harley Co. uses the conventrional retail method to estimate ending inventories.  The following data ...

A: In conventional retail Inventory method is also called lower of cost or market approach. In this met...

question_answer

Q: Sales-Related Transactions using Perpetual Inventory System The following selected transactions were...

A: Hey, since there are multiple questions posted, we will answer first question. If you want any speci...

question_answer

Q: Hi please give step by step instructions to figure out the problem and give me an answer to see if I...

A: a. Prepare a differential analysis:The company should replace the old machine as the loss incurred w...

question_answer

Q: Marigold Corp. has had 4 years of net income. Due to this success, the market price of its 310,000 s...

A: Stock dividends: Stock dividends are the number of shares issued by a company to the existing shareh...

question_answer

Q: The pertinent information about a piece of construction equiptment follows: cost $75,000 Estimated U...

A: Double declining balance method is used in charging depreciation on assets. Under this method, the a...

question_answer

Q: the kickback is a form of fraud   often associated

A: Fraud: Fraud is a malicious act committed by people to fulfil their personal benefits. In case of an...

question_answer

Q: Alpine Energy Corporation has 1,500,000 shares of $10 par common stock outstanding. On August 2, Alp...

A: Required journal entry: