Repeat the requirements in E11- 14 assuming that Kurtis Koal Company, Inc. acquired the asset on August 1 of the current year. Use partial- year depreciation without adopting any of the acceptable conventions that simplify the computation.
In E11- 14
Assuming that Kurtis Koal Company, Inc. is an IFRS reporter and the mining machine has two components: casing and engine. $ 800,000 is allocated to the engine, which has a six- year useful life and $ 60,000 salvage value. $ 100,000 is allocated to the casing, which has a 10- year useful life and no salvage value. The straight- line method is used.
Year Tons of Coal
1 …………………. 700,000
2 …………………. 1,400,000
3 …………………. 1,600,000
4 …………………. 1,000,000
5 …………………. 750,000
6 …………………. 550,000
Required
a. Prepare the depreciation schedule for the machine.
b. Kurtis Koal sells the mining machine for $ 450,000 at the end of year 3. What is the gain or loss on the sale?