Vorst Corporation’s schedule of depreciable assets at December 31, Year 3, is sh
ID: 2585151 • Letter: V
Question
Vorst Corporation’s schedule of depreciable assets at December 31, Year 3, is shown in the next column. Vorst takes a full year’s depreciation expense in the year of an asset’s acquisition and no depreciation expense in the year of an asset’s disposition. The estimated useful life of each depreciable asset is 5 years.
Accumulated
Acquisition
Salvage
Asset
Cost
Depreciation
Date
Value
A
$100,000
$ 64,000
Year 2
$20,000
B
55,000
36,000
Year 1
10,000
C
70,000
33,600
Year 1
14,000
$225,000
$133,600
$44,000
Vorst Corporation’s schedule of depreciable assets at December 31, Year 3, is shown in the next column. Vorst takes a full year’s depreciation expense in the year of an asset’s acquisition and no depreciation expense in the year of an asset’s disposition. The estimated useful life of each depreciable asset is 5 years.
Accumulated
Acquisition
Salvage
Asset
Cost
Depreciation
Date
Value
A
$100,000
$ 64,000
Year 2
$20,000
B
55,000
36,000
Year 1
10,000
C
70,000
33,600
Year 1
14,000
$225,000
$133,600
$44,000
Explanation / Answer
Asset C
Annual dep = 33600/3 (accumlated dep for 3 years)
= 11200
Depreciation of asset C in 4th year = dep for 6 months ( 11200/2)= 5600
Total dep = 33600+5600 = 39200
Cash received on sale = 28000
carrying value = 70000-39200= 30800
loss on sale = 30800-28000
= 2800
Thus ans D is correct
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