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Colt1911 [192]
3 years ago
9

On January 1, 2009, Coronado Industries purchased for $690000, equipment having a useful life of ten years and an estimated salv

age value of $48600. Coronado has recorded monthly depreciation of the equipment on the straight-line method. On December 31, 2017, the equipment was sold for $152500. As a result of this sale, Coronado should recognize a gain of
(A) $88360.
(B) $152500.
(C) $0.
(D) $39760
Business
1 answer:
JulijaS [17]3 years ago
6 0

Answer:

There is not gain in this operation so the answer is $0

Explanation:

There are some journal entries that needs to be done to have a full picture of the statement

* Purchase

Fixed Assets                        690.000

Cash                                                        690.000

* Monthly depreciation

Since, the FA was depreciated during 8 years. Firstly you have to calculate the amount that can be depreciate on a monthly basis

Amount to be depreciated = (Cost of the FA - Salvage value) = (690.000-48.600) = 641.400

Then calculate the yearly depreciation

Yearly depreciation = ((amount to be depreciated/useful life) * years used) =

(641.400/10*8) = 513.120

then the journal entry to record the monthly depreciation for 8 years is

Depreciation expense          513.120

Acc Depreciation                                   513.120

* Post the Journal Entry to record the sell of FA

You have to reverse the Acc Depreciation and credit the FA

Cash                                     152.500

Fixed assets                                         690.000

Acc depreciation                   513.120

Loss on sale of FA                   24.380

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reward power

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Reward power -

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