During 2014, Rayon Corporation disposed of two different assets. On January 1, 2014, prior to disposal of
Question:
During 2014, Rayon Corporation disposed of two different assets. On January 1, 2014, prior to disposal of the assets, the accounts reflected the following:
The machines were disposed of in the following ways:
a. Machine A: Sold on January 2, 2014, for $33,500 cash.
b. Machine B: On January 2, 2014, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Accumulated Estimated Life Original Residual Depreciation (straight-line) Value Asset Cost $60,000 14,200 $28,000 (4 years) 7,365 (3 $11,000 1,925 7 years 5 years Machine A Machine B
Step by Step Answer:
Req 1 Machine A Jan 2 2014 a Depreciation expense in 2014 none recorded because disposal date wa...View the full answer
Fundamentals of Financial Accounting
ISBN: 978-1259103292
4th Canadian edition
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh
Related Video
Depreciation of non-current assets is the process of allocating the cost of the asset over its useful life. The cost of the asset includes the purchase price, any additional costs incurred to bring the asset to its current condition and location, and any other costs that are directly attributable to the asset. The useful life of the asset is the period over which the asset is expected to be used by the company. To calculate the depreciation, companies use different methods such as straight-line, declining-balance, sum-of-the-years\'-digits, units-of-production, and group depreciation. The chosen method will depend on the type of asset, the company\'s accounting policies, and the accounting standards that are applicable. The straight-line method allocates an equal amount of the asset\'s cost over its useful life, while the declining-balance method calculates depreciation at a fixed rate, typically double the straight-line rate, but the amount of depreciation decreases over time. The sum-of-the-years\'-digits method is similar to the declining-balance method, but the rate of depreciation is calculated using a fraction that is based on the useful life of the asset. It\'s important to note that the depreciation expense will be recorded on the company\'s income statement and the accumulated depreciation will be recorded on the company\'s balance sheet. This will decrease the value of the asset on the balance sheet over time.
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