Cullumber Company owns delivery equipment that cost $53,800 and has accumulated depreciation of $27,300 as of July 30, 2020. On that date, Cullumber disposes of this equipment. For parts b - d below, enter D for debit or C for credit in the first box and the amount in the second box. What is the net book value of the equipment on July 30, 2020? Assume Cullumber scraps the equipment as having no value on July 30. What is the gain or loss, if any, that Cullumber should recognize? Assume Cullumber sells the equipment for $37,200 cash on July 30. What is the gain or loss, if any, that Cullumber should recognize?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Cullumber Company owns delivery equipment that cost $53,800 and has
- What is the net book value of the equipment on July 30, 2020?
- Assume Cullumber scraps the equipment as having no value on July 30. What is the gain or loss, if any, that Cullumber should recognize?
- Assume Cullumber sells the equipment for $37,200 cash on July 30. What is the gain or loss, if any, that Cullumber should recognize?
- Assume Cullumber sells the equipment for $18,000 cash on July 30. What is the gain or loss, if any, that Cullumber should recognize?
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