Determine depreciation that should be on income statement

Assignment Help Financial Accounting

Reference no: EM131256769

Merton Company purchased a building on January 1, 2013, at a cost of $364,000. Merton estimated that its life would be 25 years and its residual value would be $14,000. On January 1, 2014, the company made several expenditures related to the building. The entire building was painted and floors were refinished at a cost of $21,000. A federal agency required Merton to install additional pollution control devices in the building at a cost of $42,000. With the new devices, Merton believed it was possible to extend the life of the building by six years. In 2015, Merton altered its corporate strategy dramatically. The company sold the building on April 1, 2015, for $392,000 in cash and relocated all operations to another state. 1. Determine the depreciation that should be on the income statement for 2013 and 2014. 2. What amount of gain or loss did Merton record when it sold the building? Do not round intermediate calculations. 3. What amount of gain or loss would have been reported if the pollution control equipment had been exposed in 2014?

Reference no: EM131256769

Questions Cloud

The payment of interest and the related amortization : McGee Company issued $400,000 of 8%, 20-year bonds on January 1, 2014, . Interest is payable semiannually on July 1 and January 1. McGee Company uses the effective interest method of amortization for bond premium or discount. Assume an effective yiel..

Prepare cook company journal entries related to the lease : On January 1, 2016, Cook Textiles leased a building with two acres of land from Peck Development. The lease is for 10 years at which time Cook has an option to purchase the property for $130,000. The building has an estimated life of 20 years with a ..

What security features will you implement : What data will you need to prepare an accounts receivable aging report. Where will you collect the data you need to prepare the report? How will you collect the necessary Data for the report? How will you distribute the report? How many copies will y..

More accurately represent the value of its assets : A company uses depreciation to more accurately represent the value of its assets. Discuss how you would determine the life of an asset and what the implications would be if the life you select is too long or too short. How would you correct this?

Determine depreciation that should be on income statement : Merton Company purchased a building on January 1, 2013, at a cost of $364,000. Merton estimated that its life would be 25 years and its residual value would be $14,000. On January 1, 2014, the company made several expenditures related to the building..

Interest charges were earned for current and preceding years : The following data were taken from recent annual reports of Caliber Company, which operates a low-fare company service to over 50 cities in the United States. Current Year Preceding Year Interest expense $42,000 $46,000 Income before income tax 247,8..

What are the best-case and worst-case scenarios : You are considering a new product launch. The project will cost $2,300,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. The unit sales, variable cost, and fixed cost projections given above are probably ac..

Aging method to adjust allowance for uncollectible accounts : Maverick Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. At December? 31, 2014 the balance of accounts receivable is $220,000, and the allowance for uncollectible accounts has a credit balanc..

What is the adjusting journal entry : If the company purchased $800 of supplies with cash on 1/1/2015, what is the journal entry? If someone counts the supplies still have $300 leftover on 12/31/2015, what is the adjusting journal entry?

User Account

All Pages