Question
Sherman, Inc., uses the calendar year as its reporting period. During Year 1, the company completed numerous property, plant, and equipment transactions. In particular, Sherman
Sherman, Inc., uses the calendar year as its reporting period. During Year 1, the company completed numerous property, plant, and equipment transactions. In particular, Sherman incurred long-term debt to build a new warehouse storage facility at its current location. An unrelated building contractor managed the new warehouse construction project.
Sherman has a policy of capitalizing expenditures with a unit cost of at least $1,000 and a useful life greater than one year. The company prorates depreciation expense in the year of acquisition based on the date of purchase.
Complete Sherman's calculations of the gain or loss on each of the dispositions of property, plant, and equipment assets using the information above. Enter the appropriate amounts in the designated cells below. Indicate losses by using a leading minus (-) sign.
Item | Amount |
Furniture sold | |
Original cost of the furniture | $13,000 |
Accumulated depreciation on the furniture | 11,500 |
Fair market value of replacement furniture | 18,000 |
Sales price of the furniture sold | 1,200 |
Gain or loss recognized | |
Pickup truck exchanged for a new pickup truck | |
Original cost of truck | $24,000 |
Accumulated depreciation of truck | 21,000 |
Sticker price of new truck | 27,000 |
Fair market value of the new truck | 25,500 |
Cash paid to dealer | 21,500 |
Gain or loss recognized | |
Equipment destroyed by fire | |
Original cost of equipment | $17,500 |
Accumulated depreciation | 3,500 |
Insurance proceeds | 15,000 |
Cost to replace equipment | 23,000 |
Gain or loss recognized |
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