Question

Meubles Fischer SA had the following balances for its property, plant and equipment accounts (in thousands of euros):

	September 30, 2015	September 30, 2016
Property, plant and equipment at cost	€1,000	€1,200
Accumulated depreciation	(350)	(390)
Property, plant and equipment, net	€650	€810

During fiscal year 2016, Meubles Fischer acquired €110 thousand in property by signing a mortgage, plus another €310 thousand in equipment for cash. The company also received €110 in cash from the sale of used equipment, and its income statement reveals a €30 thousand gain from this transaction.

a.	What was the original cost of the used equipment that Meubles Fischer SA sold during fiscal year 2016?
	€Answer thousand
b.	How much depreciation had been accumulated on the used equipment at the time it was sold?
	€Answer thousand
c.	How much depreciation expense did Meubles Fischer SA recognize in its fiscal year 2016 income statement?
	€Answer thousand

Answer 1

a. Original cost of the equipment sold:

Property,plant and equipment at cost:
Beginning balance	1,000
Purchases (110+310)	420
Less: Ending balance	(1,200)
Original cost of sold equipment	220

b. Accumulated depreciation on the equipment sold:

Cash received from the sale	110
Less: Gain on sale of equipment	($30)
Book value of the sold equipment	80
Original cost of the equipment that sold	220
Less: Book value of the equipment that sold	(80)
Accumulated depreciation on sold equipment	140

c.Depreciation Expense for 2016 income statement:

Accumulated depreciation:
Ending balance	390
Accumulated depreciation on sold equipment	140
Less: beginning balance	(350)
Depreciation expense	180