Question

2) Flint provides the following details of the fixed asset accounts at the beginning and end of 2018: Beginning of the year (12/31/2017): Cost A/D Method Life Residual Furniture $18,000 (8,100) Straight Line 6 years 10% of cost Office Equipment 30.000 (17,100) Straight Line 5 years 5% of cost Vehicle #1 45.000 (38,250) Units of Production 72,000 miles 10% of cost $93.000 ($63,450) Actual Miles End of the year (12/31/2018): driven-2018 Cost A/D Method Life Residual n.a. Furniture $12.000 (5,400) Straight Line 6 years 10% of cost Office Equipment 30.000 (17,100) Straight Line 5% of cost 6.000 Vehicle #1 45,000 (38,250) Units of Production 72,000 miles 10% of cost 20.000 Vehicle #2 70,000 0 Units of Production 90,000 miles 10% of cost 26,000 $157,000 ($60.750) In addition to buying a new vehicle (vehicle #2 above), on January 1, 2018 Flint sold a table (Furniture). Other than these two items there were no other fixed asset acquisitions or dispositions. n.a. 5 years How much depreciation should Flint record in 2018? A) $25,175 B) $24,875 C) $24,650 D) $26,000 E) $23,750 3) Continue with question #2. What was the selling price of the table Flint sold in 2018? A) $6,000 B) $5,300 C) $4,000 D) $2,600 E) $3,300

Answer 1

Solution

2) Asset Cost (a) Method Furniture $ 12,000 Straight Line Office Eqi $ 30,000 Straight Line Vehicle #1 $ 45,000 units of Production Vehicle #2 $ 70,000 units of Production Depreciation Life (Year/Miles) Residual (% of Residual Value Actual SLM -(a-d)/b (b) Cost) (c) (d=a*c) Miles (e) Unit of Production [(a-d)/b*e] 6 10% S 1,200 S 1,800 5 5% $ 1,500 $ 5,700 72000 10% $ 4,500 6000 $ 3,375 90000 10%) $ 7,000 20000 $ 14,000 Total Depreciation Flint should record in 2018 $ 24,875 Depreceiation Flint should record in 2018 is B) $24875 Correct Answer is B) $24875 3) Furniture Cost $ Particulars Beginning of Year (12/31/2017) (a) End of Year (12/31/2018) (b) Table Sold during the year (a-b) Accumulated Depreciation 18,000 $ (8,100) 12,000 $ (5,400) 6,000 $ (2,700) $ $ WDV of table Flint sold in 2018 $ 3,300=6000-2700 In the absence of information regarding gain or loss on sale of table, It is assumed that there is no gain or loss on sale. Thus Selling Price is equal to WDV of table $ 3,300 Selling Price of table Flint sold in 2018 Correct Answer is E) $3300

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