Sabel Co. purchased assembly equipment for $836,000 on January1, 2018. Sabel’s financial condition immediately prior to thepurchase is shown in the following horizontal statements model.
The equipment is expected to have a useful life of 380,000 milesand a salvage value of $38,000. Actual mileage was as follows:
| |
| 2018 | 74,000 |
| 2019 | 79,000 |
| 2020 | 60,000 |
| 2021 | 54,000 |
| 2022 | 28,000 |
|
Required
- Compute the depreciation for each of the five years, assumingthe use of units-of-production depreciation.
- Assume that Sabel earns $248,000 of cash revenue during 2018.Record the purchase of the equipment and the recognition of therevenue and the depreciation expense for the first year in afinancial statements model like the preceding one. The first eventis recorded as an example.
- Assume that Sabel sold the equipment at the end of the fifthyear for $40,400. Calculate the amount of gain or loss on thesale.
Answer:
A-
|
| | Years | Depreciation | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 | |
|
B.
C.
Assume that Sabel sold the equipment at the end of the fifthyear for $40,400. Calculate the amount of gain or loss on thesale.
