Question

On January 1, 2016, Sheridan Corporation acquired equipment costing $72,320. It was estimated at that time that the equipment would have a useful life of eight years and no residual value. The company uses the straight-line method of depreciation for its equipment, and its year end is December 31. ✓ Your answer is correct. Calculate the equipment's accumulated depreciation and carrying amount at the beginning of 2018. Equipment's accumulated depreciation $ 18080 Carrying amount 54240 Attempts: 1 of 3 used What is the amount of the gain or loss that would arise when a quarter of the equipment was sold on January 1, 2018, for cash proceeds of $19,760? from sale of equipment $

Answer 1

a)

Solution :

Depreciation per year = (cost - residual value) /useful life.

Depreciation per year = ($72320 - $0)/8.

Depreciation per year = $9040

Accumulated depreciation at the beginning of 2018 = $9040×2 = $18080

Carrying value at the beginning of 2018 = cost - accumulated depreciation,.

= $72320 - $18080

= $54240

b) amount of gain= $6200

Solution:

gain or loss :

	Amount
Carrying value of quarter of the equipment	$13560
(-) Cash proceeds	($19760)
(Gain)/loss	($6200)