Question

During 2012, Noller Co. sold equipment that had cost $299,633 for $175,913. This resulted in a gain of $12,900. The balance in Accumulated Depreciation—Equipment was $975,000 on January 1, 2012, and $930,000 on December 31. No other equipment was disposed of during 2012. Depreciation expense for 2012 was ________.

Answer 1

$91,620

Step-by-step explanation:

Given:

Selling price of equipment = $175,913

Gain on sale = $12,900

Book value of equipment = Selling price - gain

= 175,913 - 12,900

= $163,013

Cost of equipment = $299,633

Book value = $163,013

Accumulated depreciation on sold equipment = Cost - book value

= 299,633 - 163,013

= $136,620

Calculation of depreciation expense in 2012:

Accumulated depreciation as on 31 December 2012 = $930,000

Accumulated depreciation as on 1 January 2012 = $975,000

Depreciation expense during the year = Closing accumulated depreciation + accumulated depreciation on sold equipment - Beginning accumulated depreciation

= 930,000 + 136,620 - 975,000

= $91,620