Sabel Co. purchased assembly equipment for $500,000 on January 1, 2018. Sabel’s financial condition immediately prior to the purchase is shown in the following horizontal statements model.
The equipment is expected to have a useful life of 200,000 miles and a of $20,000.
Actual mileage was as follows:
2018………………………………56,000
2019………………………………61,000
2020………………………………42,000
2021………………………………36,000
2022………………………………10,000
Required
a. Compute the depreciation for each of the five years, assuming the use of units-of-production depreciation.
b. Assume that Sabel earns $230,000 of cash revenue during 2018. Record the purchase of the equipment and the recognition of the revenue and the depreciation expense for the first year in a model like the preceding one.
c. Assume that Sabel sold the equipment at the end of the fifth year for $20,600. Calculate the amount of gain or loss on the sale.
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