Final answer:
The cash received from the sale of Ford Company's equipment was $34,000. This was determined by calculating the book value (original cost minus accumulated depreciation) of the equipment sold, which turned out to be identical to the cash received since the equipment was sold at its book value.
Step-by-step explanation:
To calculate the cash received from the sale of equipment, we should determine the book value of the equipment that was sold. The book value is calculated as the original cost of the equipment minus the accumulated depreciation up until the point of sale.
Calculation Strategy
Determine the cost of the equipment.
Calculate accumulated depreciation on the equipment at the time of sale.
Subtract the accumulated depreciation from the cost to find the book value.
Since the equipment was sold for its book value, the cash received will be the same as the book value.
In the given scenario, the cost of the equipment sold is $156,000. According to the comparative balance sheet information, the accumulated depreciation decreased from $525,000 in Year 1 to $448,000 in Year 2. This decrease includes both the depreciation expense for the year of $45,000 and the accumulated depreciation on the sold equipment.
By adding back the depreciation expense, we find the accumulated depreciation on the sold equipment to be $525,000 - $448,000 + $45,000, which is $122,000. Thus, the book value of the equipment at the time of sale is $156,000 - $122,000 = $34,000. Therefore, the cash received from the sale is $34,000.