BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

A computer was sold on April 1, 20-2, for $575. Its cost was $3,000, and accumulated depreciation as of December 31, 20-1, was $2,100 ($700 a year).

  1. (a) There was a gain of $150.
  2. (b) There was a loss of $150.
  3. (c) There was a gain of $325.
  4. (d) There was a loss of $325.

To determine

Find the correct option that indicates the correct output for the given transaction.

Explanation

Long-term assets: The assets which are used to generate revenue for the business operations for a number of accounting periods are referred to as long-term assets or plant assets.

Gain or loss on sale: Gain on sale is the amount realized on sale transaction, when the sale proceeds is more than the book value of the asset on the date of sale. Loss on sale is the amount realized on sale transaction, when the sale proceeds is less than the book value of the asset on the date of sale. Book value is the amount of acquisition cost of less accumulated depreciation as on date of disposal.

Determine the gain or loss on sale of computer.

Step 1: Compute depreciation for the period December 31, 20-1 to April 1, 20-2 (3 months).

Depreciation for the period = Annual depreciation× Time period=$700×312=$175

Step 2: Compute book value on the date of sale

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

IRR Refer to problem 11-1. What is the projects IRR?

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

Name the three types of documents.

Accounting Information Systems

Define the term marketing

MKTG 12:STUDENT ED.-TEXT

Discuss the following statement: If a firm has only independent projects, a constant WACC, and projects with no...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Name some users of accounting information.

Corporate Financial Accounting