Question

Problem 20-4A (Part Level Submission) Last year (2016), Richter Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company's accountant to provide him with cost data on the company's elevator. This information is presented below. Old Elevator $105,000 New Elevator $160,000 5 years Straight-line 4 years Straight-line Purchase price Estimated salvage value Estimated useful life Depreciation method Annual operating costs other than depreciation: Variable Fixed $35,100 23,800 $11,000 8,000 Annual revenues are $241,000, and selling and administrative expenses are $29,000, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2017, Richter Condos will be able to sell it for $24,500. (a) Your answer is partially correct. Try again. Determine any gain or loss if the old elevator is replaced. Loss on sale 8400 Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT Attempts: 2 of 3 used SAVE FOR LATER SUBMIT ANSWER (b) The parts of this question must be completed in order. This part will be available when you complete the part above. (c) The parts of this question must be completed in order. This part will be available when you complete the part above.

Answer 1

Page No. Date Calculation :- less Pue Chale Price of old Elevator = $ 105000 Accuroulated Depreciation = $ 21000 Book Value 8 84000 Income from sale of old elevator - $ 24500 I loss on sale of old elevator $59500 less Depreciation Salvage value exp - Purchak price - useful life 105000 - $ 21000 per year. Elevator wel bowqht io 2016 and is considered For Sale in eginning of 2017 So accumulated depreciation is only for 1 year. If old elevator is replaced now, loss on Sale of elevator will be $5950o. In beginning of 2017 the old elevator is Considered for sale so sell proceeds are declected from book value to calculate gain or loss from TO sale. Book value is calculated by | Accumulated elepreciation price of Asset. declucting from Purchase