Moderna Ltd. owned several manufacturing facilities to produce vaccines. On September 15 2020, Moderna decided to sell one of its manufacturing buildings. The building had cost $4,000,000 when originally purchased 8 years ago. The building had been depreciated using the straight-line method with no residual value. Moderna estimated that the building had a 25-year life when purchased. Assume 8 years of depreciation has already been recorded in the accounts to the date of disposal by Moderna and the building was sold for $2,200,000 cash. By how much is depreciation expense debited each year until disposition? What is the balance in the accumulated depreciation account of the building on September 15, 2020? What is the net carrying value of the building on September 15, 2020?. What is the impact on Moderna’s net income in 2020 as a result of the disposition of the building? A. None of the other alternatives are correct. B. $920,000 increase C. $2,720,000 D. $1,280,000 E. $610,000 F. $160,000 G. $200,000 H. $520,000 increase I. $500,000 J. $520,000 decrease
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.
Moderna Ltd. owned several manufacturing facilities to produce vaccines. On September 15 2020, Moderna decided to sell one of its manufacturing buildings. The building had cost $4,000,000 when originally purchased 8 years ago. The building had been
Assume 8 years of depreciation has already been recorded in the accounts to the date of disposal by Moderna and the building was sold for $2,200,000 cash.
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