Question
Assume that Gonzalez Company purchased an asset on January 1, 2015, for $56,400. The asset had an estimated life of six years and an estimated
Assume that Gonzalez Company purchased an asset on January 1, 2015, for $56,400. The asset had an estimated life of six years and an estimated residual value of $5,640. The company used the straight-line method to depreciate the asset. On July 1, 2017, the asset was sold for $37,250.
Required:
1. Identify and analyze the effect of the transaction for depreciation for 2017.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank c6b734f84002010_2 | fill in the blank c6b734f84002010_4 | fill in the blank c6b734f84002010_5 | fill in the blank c6b734f84002010_7 | fill in the blank c6b734f84002010_9 | fill in the blank c6b734f84002010_10 | |||||||||
Identify and analyze the effect of the sale of the asset.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank 3440ecfeff9afb9_2 | fill in the blank 3440ecfeff9afb9_4 | fill in the blank 3440ecfeff9afb9_5 | fill in the blank 3440ecfeff9afb9_7 | fill in the blank 3440ecfeff9afb9_9 | fill in the blank 3440ecfeff9afb9_10 | |||||||||
| fill in the blank 3440ecfeff9afb9_12 | fill in the blank 3440ecfeff9afb9_14 | fill in the blank 3440ecfeff9afb9_15 | fill in the blank 3440ecfeff9afb9_17 | fill in the blank 3440ecfeff9afb9_19 | fill in the blank 3440ecfeff9afb9_20 | |||||||||
| fill in the blank 3440ecfeff9afb9_22 | fill in the blank 3440ecfeff9afb9_24 | fill in the blank 3440ecfeff9afb9_25 | fill in the blank 3440ecfeff9afb9_27 | fill in the blank 3440ecfeff9afb9_29 | fill in the blank 3440ecfeff9afb9_30 | |||||||||
2. How should the gain or loss on the sale of the asset be presented on the income statement?
The gain or loss should appear in the _________ of the income statement to indicate that it __________ part of the normal operating activity of the company.
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Intermediate Accounting Reporting And Analysis, 2017 Update
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
2nd Edition
1337505625, 9781337505628
