Question
Citano Company has a used executive charter plane that originally cost $800,000. Straight-line depreciation on the plane has been recorded for six years, with an
Citano Company has a used executive charter plane that originally cost $800,000. Straight-line depreciation on the plane has been recorded for six years, with an $80,000 expected salvage value at the end of its estimated eight-year useful life. The last depreciation entry was made at the end of the sixth year. Eight months into the seventh year, Citano disposes of the plane.
REQUIRED
Calculate:
a. Depreciation expense for the eight months in Year 7 to the date of disposal.
b. The book value of the plane at the date of the disposal.
c. The gain or loss on the sale of the plane for $215,000 cash.
d. The gain or loss on the sale of the plane for $195,000 cash.
e. The gain or loss on the destruction of the plane in a fire. Citano expects a $190,000 insurance settlement
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