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What is the initial cost of the equipment

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Question - Use the following information for the next five questions: Entity A acquires equipment on January 1, 20x1. Information on costs is as follows: Purchase price, gross of trade discount 1,000,000

Trade discount available 10,000

Freight costs 20,000

Testing costs 30,000

Net disposal proceeds of samples generated during testing 5,000

Current value of estimated costs of dismantling the equipment at the end of its useful life 6,209

Required -

1. What is the initial cost of the equipment?

2. The equipment has an estimated useful life of 10 years and a residual value of ?200,000. Entity A uses the straight line method of depreciation. How much is the carrying amount of the equipment on December 31, 20x3?

3. On December 31, 20x3, Entity A revalues the equipment at a fair value of ?820,000. There is no change in the residual value and the remaining useful life of the asset. How much is the revaluation surplus on December 31, 20x3?

4. What is the depreciation expense for 20x4?

5. Entity A sells the equipment for 870,000 on January 1, 20x5. Entity A incurs selling costs of 20,000 on the sale. How much is the gain (loss) on the sale?

Reference no: EM132854349

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