Rosetta Company had the following balances in its Equipment and Accumulated Depr
ID: 2476285 • Letter: R
Question
Rosetta Company had the following balances in its Equipment and Accumulated Depreciation on Equipment accounts at the beginning and end of 2012. January 1 December 31 Equipment $115,000 $140,000 Accumulated depreciation, equipment 30,000 12,000 During 2012, Rosetta sold equipment for $18,500 that originally cost $35,000. The book value at the time of sale was $9,000. Net income for 2012 was $380,000. A. How much depreciation expense was recorded for equipment by Rosetta Company during 2012? B. What was the cost of equipment purchased during the year? C. Show how the effects of these transactions would be reported by preparing the operating and investing activities sections of the statement of cash flows.
Explanation / Answer
A.
B.
C.
Profit on sale of equipment will deduct from net income and depreciation amount will add back to net income for calculating cash flow from operating activities.
sale of equipment will show as cash inflow and purchase of equipment will show as cash out flow under investing activities.
Accumulated depreciation on December 31st 12,000 Add: Accumulated depreciation portion for sold assets 26,000 Less: Accumulated depreciation on January 1st -30,000 Depreciation booked during the year 8,000Related Questions
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