Depreciation; Gains and Losses in Financial Statements

question 36

Essay

Depreciation; gains and losses in financial statements
In 2010, Amalfi, Inc. purchased equipment with an estimated 10-year life for $42,600. The residual value was estimated at $9,900. Amalfi uses straight-line depreciation and applies the half-year convention.
On April 18, 2012, Amalfi closed one of its plants and sold this equipment for $33,600. Under these assumptions, compute the following for this equipment:

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Definitions:

Intra-entity Purchases

Buying activities of goods or services conducted between departments or divisions within the same entity.

Equity Method

An accounting technique used to assess the profits earned by an investment in another company, recognizing such profits proportional to ownership share.

Intra-entity Purchases

Transactions involving the exchange of goods or services between entities within the same parent company, often leading to consolidation adjustments.

Gross Profit Rate

The ratio of gross profit to net sales, indicating the efficiency of a company in controlling its production or purchase costs.