On September 1, 2019, Arthur Corporation purchased a new central air conditioning unit for $135,000. The estimated
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years and the company expects to use it for 20,000 hours, in its total useful life. It was used for 1,900 hours in year 1; 4,800 hours in year 2; 4,750 hours in year 3; 4,550 hours in year 4; 4,000 hours in year 5.
Required:
(a). Compute the values of Annual Depreciation, Accumulated Depreciation, and Book Value for the years 2019, 2020, and 2021, if the company follows:
(i). Straight-line Method.
(ii). Units-of-activity Method.
(iii). Reducing Balance Method (at 30%). (10 marks)
(b). Assume that on July 1, 2021, Arthur Corporation plans to sell (dispose of) the central air conditioning unit and intends to make a gain of $10,000 from selling the asset. Calculate
how much the central air conditioning unit should be sold for in order to make a gain of $10,000 on the disposal of the asset. Assume that the company follows Straight-line Method.
Related Book For
Intermediate Accounting
ISBN: 978-1119048534
11th Canadian edition Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
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