Reading 37: Long-Lived Assets LOS h习题精选

2010, statements, generated, following

LOS h: Discuss the impact of sales or exchanges of long-lived assets on financial statements.

Spenser Inc. owns a piece of specialized machinery with a current fair value of $400,000. The original cost of the machinery was $500,000 and to date has generated accumulated depreciation of $140,000. Which of the following must Spenser record on the income statement if it decides to abandon the asset?

A)	Loss of $360,000.

B)	Gain of $40,000.

C)	Loss of $100,000.

With an abandonment of an asset, the carrying value of the machinery is removed from the balance sheet and a loss of that amount is recognized in the income statement. The carrying value is $360,000, which equals the original cost ($500,000) less the accumulated depreciation ($140,000).

honeycfa

游客

UID: 164365
帖子: 3564
主题: 498
注册时间: 2010-4-13
最后登录: 2010-6-18

2^#

发表于 2010-4-19 15:36 | 只看该作者

Felker Inc. owns a piece of specialized machinery. The original cost of the machinery was $500,000 and to date there is an accumulated depreciation balance of $140,000. Which of the following will Felker recognize on its income statement if it sells the machinery for $400,000?

A)	Loss of $100,000.

B)	Loss of $360,000.

C)	Gain of $40,000.

With a sale of an asset to a third party, the difference between the proceeds and carrying value is reported as a gain or loss on the income statement. The carrying value is $360,000, which equals the original cost ($500,000) less the accumulated depreciation ($140,000). Therefore, the gain is equal to $40,000 ($400,000 proceeds less $360,000 carrying value).

TOP

shxjm