Consider the following independent situations for Cheyenne Corporation. Cheyenne

Question

Consider the following independent situations for Cheyenne Corporation. Cheyenne applies ASPE. Situation 1: Cheyenne purchased equipment in 2010 for $143,400 and estimated a $11,400 residual value at the end of the equipment's 10-year useful life. At December 31, 2016, there was $92,400 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2017, the equipment was sold for $37,600. Situation 2: Cheyenne sold a piece of machinery for $11,630 on July 31, 2017. The machine originally cost $42,820 on January 1, 2009. It was estimated that the machine would have a useful life of 12 years with a residual value of $2,500, and the straight-line method of depreciation was used. er nethed al tprec aia oniginaly Situation 3: Cheyenne sold equipment that had a carrying amount of $4,200 for S 5,700. The equipment originally cost $12,200 and it is estimated that it would cost $17,200 to replace the equipment.

Explanation / Answer

Accounting Titles & Explanation Debit Credit Situation 1 Depreciation expense 3300 Accumulated depreciation 3,300 (143400-11400)/10 *3/12 Cash 37,600 Accumulated depreciation (92400+3300) 95700 loss on disposal of Equipment 10,100 Equipment 143,400 Situation 2 Depreciation expense 1960 Accumulated depreciation 1,960 (42820-2500)/12 *7/12 Cash 11,630 Accumulated depreciation (3360*8+1960) 28840 loss on disposal of Equipment 2,350 Equipment 42,820 42,820 42820 Situation 3 Cash 5,700 Accumulated depreciation (12200-4200) 8000 Gain on disposal of Equipment 1,500 Equipment 12,200

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