During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the company's accounting records: From the Income Statement Depreciation expense Loss on sale of equipment From the Balance Sheet Beginning equipment Ending equipment Beginning accumulated depreciation Ending accumulated depreciation $ 900 3,900 20, 200 10,500 1,850 1,840 No new equipment was bought during the period. Required: 1. For the equipment that was sold, determine its original cost, its accumulated depreciation, and the cash received from the sale. (Use the equipment and accumulated depreciation T-accounts to infer the book value of the equipment sold.) 2. Sanchez Company uses the indirect method for the Operating Activities section of the cash flow statement. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Operating Activities? 3. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Investing Activities?
During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the company's accounting records: From the Income Statement Depreciation expense Loss on sale of equipment From the Balance Sheet Beginning equipment Ending equipment Beginning accumulated depreciation Ending accumulated depreciation $ 900 3,900 20, 200 10,500 1,850 1,840 No new equipment was bought during the period. Required: 1. For the equipment that was sold, determine its original cost, its accumulated depreciation, and the cash received from the sale. (Use the equipment and accumulated depreciation T-accounts to infer the book value of the equipment sold.) 2. Sanchez Company uses the indirect method for the Operating Activities section of the cash flow statement. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Operating Activities? 3. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Investing Activities?
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets
Section: Chapter Questions
Problem 4AP
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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