Question
Sabel Co. purchased assembly equipment for $725,000 on January 1, 2018. Sabel's financial condition immediately prior to the purchase is shown in Required B. The
Sabel Co. purchased assembly equipment for $725,000 on January 1, 2018. Sabel's financial condition immediately prior to the purchase is shown in Required B.
The equipment is expected to have a useful life of 250,000 machine hours and a salvage value of $25,000. Actual machine-hour use was as follows:
| 2018 | 66,000 |
| 2019 | 66,000 |
| 2020 | 57,000 |
| 2021 | 48,000 |
| 2022 | 15,000 |
Required
- Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation.
- Assume that Sabel earns $235,000 of cash revenue during 2018. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in a horizontal statements model. The first event is recorded as an example.
- Assume that Sabel sold the equipment at the end of the fifth year for $26,100. Calculate the amount of gain or loss on the sale.
Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation. (Do not round intermediate calculations.)
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Assume that Sabel earns $235,000 of cash revenue during 2018. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in a horizontal statements model. The first event is recorded as an example. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and leave the cell blank to indicate the element is not affected by the event. Enter any decreases to account balances with a minus sign.)
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c. Assume that Sabel sold the equipment at the end of the fifth year for $26,100. Calculate the amount of gain or loss on the sale.
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Accounting concepts and applications
Authors: Albrecht Stice, Stice Swain
11th Edition
978-0538750196, 538745487, 538750197, 978-0538745482
