Portland Company sold equipment with a book value of $1,200 for $1,100 cash. Total depreciation expense for the year was $800, while accumulated depreciation decreased from $2,000 to $1,400. Property, plant and equipment decreased from $7,000 to $7,400. By calculating the difference between beginning and ending balances after accounting for sales and depreciation, it was determined that Portland Company purchased $2,400 of new equipment during the year.
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1- Portland Company sold equipment with a book value (historical cost.docx
1. 1.
Portland Company sold equipment with a book value (historical cost –accumulated
depreciation) of $1,200 for $1,100 cash. Total depreciation expense for the year was $800.
The beginning and ending balances in the Accumulated Depreciation account are $2,000 and
$1,400 respectively. The beginning and ending balances in the Property, Plant, and Equipment
account are $7,000 and $7,400 respectively. How much equipment did Portland Company
purchase during the year?
1.
Portland Company sold equipment with a book value (historical cost –accumulated
depreciation) of $1,200 for $1,100 cash. Total depreciation expense for the year was $800.
The beginning and ending balances in the Accumulated Depreciation account are $2,000 and
$1,400 respectively. The beginning and ending balances in the Property, Plant, and Equipment
account are $7,000 and $7,400 respectively. How much equipment did Portland Company
purchase during the year?
Solution
Beginning balance of property,plant and equipment = $7,000
Less: Book Value of equipment sold                     = $1,200
Less: Depreciation
Expense                                = $800
Total book value (Before purchases) (A)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â = $5,000
Ending Book value (B)
                                       Â
= $7,400
Purchases during the year (B-A)Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
= $2,400