Sabel Co. purchased assembly equipment for $608,000 on January 1, Year 1. The equipment is expected to have a useful life of 320,000 miles and a salvage value of $32,000. Actual mileage was as follows: Year 1 88,000 Year 2 84,000 Year 3 79,000 Year 4 48,000 Year 5 22,000 Required a. Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation. b. Assume that Sabel earns $242,000 of cash revenue during Year 1. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in the following financial statements model. c. Assume that Sabel sold the equipment at the end of the fifth year for $33,800. Calculate the amount of gain or loss on the sale.

Sabel Co. purchased assembly equipment for $608,000 on January 1, Year 1. The equipment is expected to have a useful life of 320,000 miles and a salvage value of $32,000. Actual mileage was as follows: Year 1 88,000 Year 2 84,000 Year 3 79,000 Year 4 48,000 Year 5 22,000 Required a. Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation. b. Assume that Sabel earns $242,000 of cash revenue during Year 1. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in the following financial statements model. c. Assume that Sabel sold the equipment at the end of the fifth year for $33,800. Calculate the amount of gain or loss on the sale.

Name: Sabel Co. purchased assembly equipment for $608,000 on January 1, Yea
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Description: Sabel Co. purchased assembly equipment for $608,000 on January 1, Year 1.The equipment is expected to have a useful life of 320,000 miles and a salvage value of $32,000.Actual mileage was as follows:Year 1 88,000Year 2 84,000Year 379,000Year 4 48,00

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 7E: Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for...

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