bigeyeslizzie
Nov 12, 2011, 11:02 PM
McNabb Corporation purchased a delivery van for $25,500 in 2012. The firm's financial condition immediately prior to the purchase is shown in the following horizontal statements model:
McNabb
Assets = Equity Rev. - Exp. = Net Inc. Cash Flow
Cash Value of Van = Com. Stk. Ret. Earn.
$50,000 NA = $50,000 NA NA – NA = NA
The van was expected to have a useful life of 150,000 miles and a salvage value of $3,000. Actual mileage was as follows:
2012 50,000 .
2013 70,000
2014 58,000
Required a. Compute the depreciation for each of the three years, assuming the use of units-of-production depreciation.
b. Assume that McNabb earns $21,000 of cash revenue during 2012, Record the purchase of the van and the recognition of the revenue and the depreciation expense for the first year in a financial statements mode like the preceding one.
c. Assume that McNabb sold the van at the end of the third year for $4000. Calculate the amount of gain or lose from the sale
McNabb
Assets = Equity Rev. - Exp. = Net Inc. Cash Flow
Cash Value of Van = Com. Stk. Ret. Earn.
$50,000 NA = $50,000 NA NA – NA = NA
The van was expected to have a useful life of 150,000 miles and a salvage value of $3,000. Actual mileage was as follows:
2012 50,000 .
2013 70,000
2014 58,000
Required a. Compute the depreciation for each of the three years, assuming the use of units-of-production depreciation.
b. Assume that McNabb earns $21,000 of cash revenue during 2012, Record the purchase of the van and the recognition of the revenue and the depreciation expense for the first year in a financial statements mode like the preceding one.
c. Assume that McNabb sold the van at the end of the third year for $4000. Calculate the amount of gain or lose from the sale