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Determine whether the company will realize any gain or loss

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Reference no: EM132476353

Alpha Construction acquired the following plant assets on January 5, 2009:

                                      Asset Cost                     Residual Value                            Useful Life

Office equipment         $175,000                       $15,000                                5 years

Building                  $300,000                           $20,000                               25 years

Alpha Construction uses the double declining balance method to depreciate the office equipment & the straight-line method to depreciate the building.

Required:

Question 1. Calculate depreciation for 2009 & 2010 for each of the assets.

a. Office equipment

b. Building

Question 2. Assume the building was sold at the June 21 of 2010 for $210,000. Determine whether the company will realize any gain or loss from the sale. How would the sale be reported in the statement of cash flow?

Reference no: EM132476353

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