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Anit [1.1K]
3 years ago
15

On December 31, Strike Company traded in one of its batting cages for another one that has a cost of $500,000. Strike receives a

trade-in allowance of $11,000. The old equipment had an initial cost of $215,000 and has accumulated depreciation of $185,000. Depreciation has been recorded up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction
Business
1 answer:
photoshop1234 [79]3 years ago
4 0

Answer:

the amount of loss is $19,000

Explanation:

The computation of the amount of the gain or loss is shown below:

Old equipment cost is

= Initial cost of the equipment - accumulated depreciation

= $215,000 - $185,000

= $30,000

Now the gain or loss is

= Book value of an equipment - trade in allowance

= $30,000 - $11,000

= $19,000

hence, the amount of loss is $19,000

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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2 years ago
An index model regression applied to past monthly returns in Ford’s stock price produces the following estimates, which are beli
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Answer:

(1.32%)

Explanation:

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3 years ago
A company is considering replacing an old piece of machinery, which cost $601,300 and has $350,900 of accumulated depreciation t
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Answer:

Question Aa. Alternative 1–$1,253,600

Alternative 2 –$1,230,300

Differential effect $ 23,300

b.The company should replace the old machine.

c Sunk cost $250,400

Question Ba. Alternative 1–$488,000

Alternative 2 –$466,000

Differential effect $ 22,000

b.The company should replace the old machine.

c Sunk cost $250,000

Explanation:

Question Aa. Preparation of a differential analysis dated September 13

DIFFERENTIAL ANALYSIS

Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)

September 13

Continue with Old Machine (Alternative 1); Replace Old Machine (Alternative 2) ; Differential

on Income (Alternative 2)

Revenues:

Proceeds from sale of old

machine $ 0 $64,500 $64,500

Costs:

Purchase price 0 –$483,600 –$483,600

Variable production costs (8 years)–$1,253,600 –$811,200 $442,400

($156,700*8=$1,253,600)

($101,400*8=$811,200)

Income (Loss) –$1,253,600 –$1,230,300 $ 23,300

b. The company should replace the old machine.

c. Calculation for The sunk cost

Using this for formula

Sunk cost= Book value- Accumulated

depreciation

Let plug in the formula

Sunk cost=$601,300-$350,900

Sunk cost=$250,400

Question Ba. Preparation of a differential analysis dated September 13

DIFFERENTIAL ANALYSIS

Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)

September 13

Continue with Old Machine (Alternative 1); Replace Old Machine (Alternative 2) ; Differential

on Income (Alternative 2)

Revenues:

Proceeds from sale of old

machine $ 0 $231,000 $231,000

Costs:

Purchase price 0 –$545,000 –$545,000

Variable production costs (8 years)–$488,000 –$152,000 $336,000

($61,000*8=$488,000)

($19,000*8=$152,000)

Income (Loss) –$488,000 –$466,000 $ 22,000

b. The company should replace the old machine.

c. Calculation for The sunk cost

Using this for formula

Sunk cost= Book value- Accumulated

depreciation

Let plug in the formua

Sunk cost=$600,000-$350,000

Sunk cost=$250,000

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