Question

Eastman Kodak reported that the cost of its PPE on December 31, 2010 was $6,805 million. On January 1, 2010, it had been $7,327 million. Also, the balance of accumulated depreciation on December 31, 2010 was $5,254 million. On January 1, 2010, it had been $5,516 million. Depreciation expense for the fiscal year 2010 was $420 million. During 2010, the company bought new equipment with acquisition cost of $254 million worth. The company also sold PPE and reported a $14 million gain on selling PPE.

Questions:

How much did Kodak sell its PPE for (sale price)?

Answer 1

The question is about calculating the sale price of Eastman Kodak's PPE during 2010 by using changes in PPE cost and accumulated depreciation, new equipment acquisition cost, and gain on sale. The sale price of Eastman Kodak's PPE was $20 million.

Step-by-step explanation:

The question asks to calculate how much Eastman Kodak sold its property, plant, and equipment (PPE) for during the fiscal year 2010. To find the sale price of the PPE, we need to consider the cost and accumulated depreciation of PPE at the beginning and end of the year, along with the depreciation expense, the acquisition cost of new equipment, and the gain on the sale of PPE.

First, calculate the change in accumulated depreciation and PPE cost:

• Change in accumulated depreciation: $5,516 million (beginning) - $5,254 million (ending) = $262 million (depreciation reversed due to sale)
• Change in PPE cost: $7,327 million (beginning) - $6,805 million (ending) - $254 million (new acquisitions) = $268 million (cost of PPE sold)

Now, we can find the book value of sold PPE by subtracting the depreciation reversed from the cost of sold PPE:

• Book value of sold PPE: $268 million - $262 million = $6 million

Finally, add the gain on sale to find the sale price:

• Sale price of PPE: $6 million (book value) + $14 million (gain) = $20 million

Answer 2

Kodak sold its PPE for $108 million

Step-by-step explanation:

The question here has missing sales figure for a PPE item for which the gain on sale is $14 million (given) .Sale price of PPE item are obtained from a PPE Disposal account.We need to first find the other missing figures of 1. Cost of the Sold PPE and 2. The Accumulated Depreciation of the Sold PPE item. After that we complete our PPE disposal account to find the missing figure of the Sale Price of PPE.

1. Cost of Sold PPE

Open a PPE at Cost Account: Opening Balance $ 7327 million (Debit), Addition of PPE $ 254 million (Debit),Closing Balance $6805 million(Credit).The Balancing figure of this account $ 776 million (credit) {7327+254-6805} is the cost of the PPE item sold.

2. Accumulated Depreciation of the Sold PPE Item

Open a PPE Accumulated Depreciation Account : Opening Balance $ 5516 million (Credit), Depreciation Expense $ 420 million (Credit), Closing Balance $ 5254 million (Debit). The Balancing figure of this account $682 million (Debit) is the Accumulated Depreciation of the PPE item disposed or sold.

3. Disposal Account and Calculation of the Sale Price (Balancing figure)

Open a PPE Disposal Account : Cost of PPE $ 776 million (Debit), Gain on Sale of PPE $ 14 million (Debit), Accumulated Depreciation of the PPE Sold $ 682 million (Credit). The Balancing figure of this account $ 108 million (Credit) {776+14-108} is the Sale Price of PPE item.

Thus Sale price of the PPE is $ 108 million.