Question

The following information applies to the questions displayed below) New Morning Bakery is in the process of dosing its operations. It sold its two-year old bakery ovens to Great Harvest Bakery for $700,000. The ovens originally cost $910,000 had an estimated service life of 10 years, and an estimated residual value of $60,000. New Morning Bakery uses the straight line depreciation method for all equipment 176 points Required: 1. Calculate the balance in the accumulated depreciation account at the end of the second year. Abouw d depreciation

Answer 1

Cost of Oven Residual Value Service Life $ 9,10,000 $ 60,000 10 years Depreciation (Straight Line) = (Cost - Residual Value)/Service life ($910000 - $60000) / 10 $ 85,000 per year Solution 1. Accumulated Depreciation balance at the end of 2nd Year $85000 x 2 = $ 1,70,000 Solution 2. Book Value of Ovens at the end of second year Cost of Oven - Accumulated Dep $910,000 - $170,000 $ 7,40,000 Solution 3. Loss on Sale of Ovens Book Value - Sale Proceeds $740,000 - $700,000 $ 40,000

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