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Mocris Ine, recorded the following tramactions over the life of a piace of equipment purchased in Year 1: (5.) Jan. 1, Year Purchased equipment for
Mocris Ine, recorded the following tramactions over the life of a piace of equipment purchased in Year 1: (5.) Jan. 1, Year Purchased equipment for $14,500 cash. The equipment was egtimated to bave a five-year life and 1 value and was to be depreciated using the gtraight-line method. Dec. 31, Year fecorded depreciation expense for Year 1. 1 Sept .30 , Year Undertook routine repairs costing $800. 2 Jan. 1, Year Made an adjustment costing $2,860 to the equipment. It improved the quality of the output but d 3 life and salvage value estimates. Dec.31, Year Recorded deprecistion expentre for Yeat 3. 3 Jume. 1, Year Incurred $313cost to ofl and clean the equipment. 4 Dee, 31, Year pecorded depreciation expente for Year 4. 4 Jan. 1, Year Had the equipment completely overhauled at a cost of $7,110. The overhaul was estimated to exte 5 to seven years. The salvage value did not change. Dee . 31, Year pecorded depreeiation expense for Year 5 . 5. Oct. 1, Year Received and accepted an of fer of $15,400 for the equipment. 6 Required a. Ust a horizontal statements model to show the effects of these transactions on the elements of the financial statements. The first event is recorded as an ecample. b. Determine the amount of depreciation expense to be reported on the income statements for Years 1 through 5. c. Determine the book value (cost - accumulated depreciation) Morris will report on the balance sheets at the end of Year 1 through Year 5. d. Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1. Year 6
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