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Allowance for Uncollectible Accounts
Copyrights
Land
Merchandise Inventory
Amortization
Petty Cash
Accumulated Depreciation-Equipment
Office Equipment
Accounts Payable
Buildings
Delivery Equipment
Patents
Income Summary
Transportation In
Supplies
Prepaid Insurance

Group 2
Consider the following information about a plant asset for questions 19 , and write the correct amounts on your answer sheet. The comp calendar year end.




Original Cost

$75,000


Disposal Value

$6,000


Date Purchased

01-01-15


Estimated Useful Life
5 years


Depreciation Method

?


Accumulated Depreciation as of 12-31-17
58,800


Asset Sold Date

12-31-18


Asset Sold for

$10,000





What is the amount of depreciation expense for the year 
2018?
What is the amount of gain or loss on the sale of the asset?
For this question only, consider that the asset was not sold. What is th amount of depreciation expense for the year 2019 ?

11. Allowance for Uncollectible Accounts\newline22. Copyrights\newline33. Land\newline44. Merchandise Inventory\newline55. Amortization\newline66. Petty Cash\newline77. Accumulated Depreciation-Equipment\newline88. Office Equipment\newline99. Accounts Payable\newline1010. Buildings\newline1111. Delivery Equipment\newline1212. Patents\newline1313. Income Summary\newline1414. Transportation In\newline1515. Supplies\newline1616. Prepaid Insurance\newlineGroup 22\newlineConsider the following information about a plant asset for questions 1919 , and write the correct amounts on your answer sheet. The comp calendar year end.\newline\begin{tabular}{|l|r|}\newline\hline Original Cost & $75,000 \$ 75,000 \\\newline\hline Disposal Value & $6,000 \$ 6,000 \\\newline\hline Date Purchased & 010115 01-01-15 \\\newline\hline Estimated Useful Life & 55 years \\\newline\hline Depreciation Method & ? ? \\\newline\hline Accumulated Depreciation as of 121231-3117-17 & 5858,800800 \\\newline\hline Asset Sold Date & 123118 12-31-18 \\\newline\hline Asset Sold for & $10,000 \$ 10,000 \\\newline\hline\newline\end{tabular}\newline1717. What is the amount of depreciation expense for the year 2018? 2018 ? \newline88. What is the amount of gain or loss on the sale of the asset?\newline99. For this question only, consider that the asset was not sold. What is th amount of depreciation expense for the year 20192019 ?

Full solution

Q. 11. Allowance for Uncollectible Accounts\newline22. Copyrights\newline33. Land\newline44. Merchandise Inventory\newline55. Amortization\newline66. Petty Cash\newline77. Accumulated Depreciation-Equipment\newline88. Office Equipment\newline99. Accounts Payable\newline1010. Buildings\newline1111. Delivery Equipment\newline1212. Patents\newline1313. Income Summary\newline1414. Transportation In\newline1515. Supplies\newline1616. Prepaid Insurance\newlineGroup 22\newlineConsider the following information about a plant asset for questions 1919 , and write the correct amounts on your answer sheet. The comp calendar year end.\newline\begin{tabular}{|l|r|}\newline\hline Original Cost & $75,000 \$ 75,000 \\\newline\hline Disposal Value & $6,000 \$ 6,000 \\\newline\hline Date Purchased & 010115 01-01-15 \\\newline\hline Estimated Useful Life & 55 years \\\newline\hline Depreciation Method & ? ? \\\newline\hline Accumulated Depreciation as of 121231-3117-17 & 5858,800800 \\\newline\hline Asset Sold Date & 123118 12-31-18 \\\newline\hline Asset Sold for & $10,000 \$ 10,000 \\\newline\hline\newline\end{tabular}\newline1717. What is the amount of depreciation expense for the year 2018? 2018 ? \newline88. What is the amount of gain or loss on the sale of the asset?\newline99. For this question only, consider that the asset was not sold. What is th amount of depreciation expense for the year 20192019 ?
  1. Calculate Depreciation Expense: Calculate the annual depreciation expense using the straight-line method.\newlineAnnual Depreciation Expense = (Original CostDisposal Value)/Estimated Useful Life(\text{Original Cost} - \text{Disposal Value}) / \text{Estimated Useful Life}\newline= ($75,000$6,000)/5 years(\$75,000 - \$6,000) / 5 \text{ years}\newline= $69,000/5\$69,000 / 5\newline= $13,800 per year\$13,800 \text{ per year}
  2. Determine Accumulated Depreciation: Determine the accumulated depreciation as of 121231-3118-18. Accumulated Depreciation on 121231-3117-17 is $58,800\$58,800. Add the annual depreciation expense for 20182018 to the accumulated depreciation. Accumulated Depreciation on 121231-3118-18 = $58,800+$13,800=$72,600\$58,800 + \$13,800 = \$72,600
  3. Calculate Book Value: Calculate the book value of the asset as of 121231-3118-18.\newlineBook Value = Original Cost - Accumulated Depreciation\newline= \$\(75,000000 - \$\(72\),\(600\)\(\newline\)= \$\(2\),\(400\)
  4. Determine Gain or Loss: Determine the gain or loss on the sale of the asset.\(\newline\)Asset Sold for \(\$10,000\).\(\newline\)Gain/Loss = Sale Price - Book Value\(\newline\)= \(\$10,000\) - \(\$2,400\)\(\newline\)= \(\$7,600\)\(\newline\)Since the sale price is higher than the book value, it's a gain.
  5. Calculate Depreciation Expense for \(2019\): For the year \(2019\), calculate the depreciation expense assuming the asset was not sold.\(\newline\)Since the asset has already been fully depreciated by the end of \(2018\) (Accumulated Depreciation is equal to the depreciable amount), there is no depreciation expense for \(2019\).\(\newline\)Depreciation Expense for \(2019\) = \(\$0\)

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