Tyson, Inc. uses the calendar year as its reporting period. During Year 1, it co
ID: 2720106 • Letter: T
Question
Tyson, Inc. uses the calendar year as its reporting period. During Year 1, it completed numerous property, plant, and equipment transactions. In particular, Tyson incurred noncurrent debt to build a new warehouse storage facility at its current location. An unrelated building contractor managed the new warehouse construction project.
Tyson has a policy of capitalizing expenditures with a unit cost of at least $1,000 and a useful life greater than 1 year. The company prorates depreciation expense in the year of acquisition based on the date of purchase.
Enter in the shaded cells the gain of loss on each of the following dispositions of property, plant, and equipment assets. A loss should be indicated by a negative number with a leading minus (-) sign. If the answer is zero, enter a 0.
Furniture sold
Original cost of furniture $13,000
Accumulated depreciation on the furniture 11,500
Fair value of replacement furniture 18,000
Sales price of the furniture sold 1,200
Pickup truck exchanged for a new pickup truck
Original cost of truck $25,000
Accumulated depreciation of truck 11,000
Fair value of truck 23,500
Sticker price of new truck 27,000
Fair value of the new truck 25,500
Cash paid to dealer 2,000
Equipment destroyed by fire
Original cost of equipment $17,500
Accumulated depreciation 3,500
Insurance proceeds 15,000
Cost to replace equipment 23,000
The information to the right pertains to Tyson, Inc.'s property, plant and equipment transactions.
Using the information provided, enter in the shaded cells the gain or loss on each of the dispositions of property, plant and equipment assets. A loss should be indicated by a negative number. If the answer is zero, enter a 0.
Gain or Loss Recognized
Amount
1
Furniture
2
Pickup truck
3
Equipment
Gain or Loss Recognized
Amount
1
Furniture
2
Pickup truck
3
Equipment
Explanation / Answer
Gain or Loss Recognized Furniture Amount($) Fair value of replacement furniture 18000 Less: Sales price of the furniture sold 1200 Loss on Sale of Furniture 16800 Pickup truck exchanged for a new pickup truck Amount($) Fair value of truck 23500 Less:Fair value of the new truck 25500 Less:Cash paid to dealer 2000 Loss on Replacement -4000 Equipment destroyed by fire Amount($) Original cost of equipment 17500 Less:Accumulated depreciation 3500 WDV 14000 Insurance proceeds 15000 Gain on Destroyed Equipment 1000
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