FA Module 6 Sale of equipment practice exam questions
(The attached PDF file has better formatting.)
A firm reports the following financial statement figures:
Calendar Year 20XX-1 Calendar Year 20XX Depreciation expense (equipment) 17 19 Gain (loss) on sale of equipment 15 -19 December 31, 20XX-1 December 31, 20XX Equipment (historical cost) 434 479 Accumulated depreciation on equipment 218 231
On December 31, 20XX, the firm paid 139 to buy new equipment.
Question 6.2: Historical cost of equipment
What is the change in the historical cost of equipment in 20X2?
Answer 6.2: 479 – 434 = 45
Question 6.3: Historical cost of equipment sold
What is the historical cost of the equipment sold in 20X2?
Answer 6.3: 139 – 45 = 94
(historical cost of equipment sold = cost of equipment bought – Δ(historical cost of equipment) )
Question 6.4: Accumulated depreciation
What is the change in the accumulated depreciation for equipment from 12/31/20X1 to 12/31/20X2?
Answer 6.4: 231 – 218 = 13
Question 6.5: Accumulated depreciation for equipment sold
What was the accumulated depreciation for the equipment sold in 20X2?
Answer 6.5: 19 – 13 = 6
(accumulated depreciation for the equipment sold = depreciation expense – Δ(accumulated depreciation) )
Question 6.6: Sales price
What was the sales price of the equipment sold in 20X2?
Answer 6.6: 94 – 6 – 19 = 69
(sales price = historical cost of equipment sold – accumulated depreciation on equipment sold + gain (loss) on sale)
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