Depreciation and disposal--a comprehensive problem
Domino, Inc uses straight-line depreciation with a half-year convention in its financial statements. On 10 March 2006, Domino acquired a computer system at a cost of $98,800. Estimated useful life is six years, with residual value of $5,200.
(a) Complete the following schedule, showing depreciation expense Domino expects to recognize each year in the financial statements.

\begin{array} { | l | l | } \hline & \text { Depreciation Recognized } \\\hline \text { Year } & \text { in Financial Statements } \\\hline 2006 & \$ \\\hline 2007 & \$ \\\hline 2008 & \$ \\\hline 2009 & \$ \\\hline 2010 & \$ \\\hline 2011 & \$ \\\hline 2012 & \$ \\\hline\end{array}

(b) Assume Domino sells the computer system on 3 October 2009, for $26,650. For financial statement purposes, compute the book value of the computer system at date of disposal and the gain or loss on disposal. (Indicate gain or loss.)

\begin{array}{|l|l|}\hline \text { Book value (date of sale) \quad\quad \quad\quad } &\$\underline{\quad\quad\quad \quad} \\\hline \text { Gain or loss on disposal } & \$ \underline{\quad\quad\quad \quad}\\\hline\end{array}

A Gain Is Recognized on the Disposal of PPE Assets

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge