During 2021, equipment with a book value of $64,000 and an original cost of $225,000 was sold at a loss of $7,800. 1. How much cash did Anders receive from the sale of equipment? 2. How much depreciation expense was recorded on equipment during 2021? 3. What was the cost of new equipment purchased by Anders during 2021?
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During 2021, equipment with a book value of $64,000 and an original cost of $225,000 was sold at a loss of $7,800.
1. How much cash did Anders receive from the sale of equipment?
2. How much
3. What was the cost of new equipment purchased by Anders during 2021?
DEPRECIATION EXPENSE
Depreciation means gradual decrease in the value of an asset due to normal wear and tear, obsolescence etc.
Method of Depreciation :—
- Straight Line Method
- Diminishing Value Method
- Sum of Digit Method
- Double Declining Method.
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- Estimate the average total estimated useful life of depreciable property, plant, and equipment. Starbucks reports 580.6 million of depreciation and amortization in the statement of cash flows, of which 4.5 million relates to amortization of limited-life intangible assets. Does the estimate reconcile with stated accounting policy on useful lives for property, plant, and equipment? Explain.Balance Sheet and Notes Listed here in random order are Wicks Construction Limiteds balance sheet accounts and related ending balances as of December 31, 2019: Additional information: 1. The company reports on the balance sheet the total amount for inventories and the net book value of property, plant, and equipment, with the related details for each account disclosed in notes. 2. The straight line method is used to depreciate buildings, machinery, and equipment, based upon their cost and estimated residual values and lives. A breakdown of property, plant, and equipment shows the following: land at a cost of 32,000, buildings at a cost of 182,400 and a net book value of 120,200, machinery at a cost of 63,900, and related accumulated depreciation of 18,600, and equipment (40% depreciated) at a cost of 53,000. 3. Patents are amortized on a straight line basis directly to the Patent account. 4. Inventories are listed at the lower of cost or market value using an average cost. The inventories include raw-materials, 22,200; work in process, 34,700; and finished goods, 41,600. 5. Common stock has a 10 par value per share, 12,000 shares are authorized, and 6,280 shares have been issued. 6. Preferred stock has a 100 par value per share, 1,000 shares are authorized, and 400 shares have been issued. 7. The investment in bonds is carried at the original cost, which is the face value, and is being held to maturity. 8. Short-term investments in marketable securities were purchased at year-end. 9. The bonds payable mature on December 31, 2024. 10. The company attaches a 1-year warranty on all the products it sells. Required: 1. Prepare Wicks Constructions December 31, 2019, balance sheet (including appropriate parenthetical notations). 2. Prepare notes to accompany the balance sheet that itemize company accounting policies; inventories; and property, plant, and equipment. 3. Next Level Compute the current ratio and the quick ratio. How do these two ratios provide different information about the companys liquidity? Why are these ratios useful?Analyze Home Depot The Home Depot (HD) reported the following data (in millions) in its recent financial statements: a. Determine the asset turnover ratio for Home Depot for Year 2 and Year 1. Round to two decimal places. b. What conclusions can be drawn from these ratios concerning the change in the ability of Home Depot to effectively use its assets to generate sales?
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- Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8 Instructions Asset turnoverComparative Analysis: Under Armour, Inc., versus Columbia Sportswear Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: With regard to depreciation methods: a. What depreciation method does Under Armour use? What depreciation method does Columbia use? b. What are the typical useful lives of each companys operating assets? c. What effect will the useful lives have on the companys financial statements?Required information Skip to question [The following information applies to the questions displayed below.]The plant assets section of the comparative balance sheets of Anders Company is reported below. ANDERS COMPANY Comparative Year-End Balance Sheets 2021 2020 Plant assets Equipment $ 200,000 $ 290,000 Accumulated depreciation—Equipment (108,000) (218,000) Equipment, net $ 92,000 $ 72,000 Buildings $ 400,000 $ 420,000 Accumulated depreciation—Buildings (112,000) (297,000) Buildings, net $ 288,000 $ 123,000 During 2021, equipment with a book value of $44,000 and an original cost of $230,000 was sold at a loss of $3,800. 1. How much cash did Anders receive from the sale of equipment?2. How much depreciation expense was recorded on equipment during 2021?3. What was the cost of new equipment purchased by Anders during 2021?
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