Sabel Co. purchased assembly equipment for $836,000 on January 1, 2018. Sabel’s financial condition immediately prior...

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Accounting

Sabel Co. purchased assembly equipment for $836,000 on January1, 2018. Sabel’s financial condition immediately prior to thepurchase is shown in the following horizontal statements model.
The equipment is expected to have a useful life of 380,000 milesand a salvage value of $38,000. Actual mileage was as follows:
2018 74,000
2019 79,000
2020 60,000
2021 54,000
2022 28,000
Required
Compute the depreciation for each of the five years, assumingthe use of units-of-production depreciation.
Assume that Sabel earns $248,000 of cash revenue during 2018.Record the purchase of the equipment and the recognition of therevenue and the depreciation expense for the first year in afinancial statements model like the preceding one. The first eventis recorded as an example.
Assume that Sabel sold the equipment at the end of the fifthyear for $40,400. Calculate the amount of gain or loss on thesale.
Answer:
A-
Years Depreciation
2018
2019
2020
2021
2022
B.
C.
Assume that Sabel sold the equipment at the end of the fifthyear for $40,400. Calculate the amount of gain or loss on thesale.

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4.1 Ratings (809 Votes)

Depriciation charge per year purchase cost of equipment salvage valueActual mileageuseful life of 38000 miles where purchase cost 836000 estimated salvage value 38000 a Computation of depreciation for each of the five year year See Answer

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