At the end of 20X0, Solar Power Associates (SPA) had total assets of $17.3 billion and total
Question:
At the end of 20X0, Solar Power Associates (SPA) had total assets of $17.3 billion and total liabilities of $9.5 billion. Included among the assets were property, plant, and equipment with a cost of $4.8 billion and accumulated depreciation of $3.4 billion.
SPA completed the following selected transactions during 20X1: The company earned total revenues of $26.5 billion and incurred total expenses of $21.3 billion, which included depreciation of $1.7 billion. During the year, SPA paid $1.4 billion for new property, plant, and equipment and sold old plant assets for $0.3 billion. The cost of the assets sold was $0.8 billion, and their accumulated depreciation was $0.4 billion.
Required
1. Explain how to determine whether SPA had a gain or loss on the sale of old plant assets during the year. What was the amount of the gain or loss, if any?
Step by Step Answer:
Financial Accounting
ISBN: 978-0135012840
7th edition
Authors: Walter T. Harrison, Charles T. Horngren