Computing Depreciation, Net Book Value, and Gain or Loss on Asset Sale

Computing Depreciation, Net Book Value, and Gain or Loss on Asset Sale, Computing Asset Related Ratios of Lynch Company

Computing Depreciation, Net Book Value, and Gain or Loss on Asset Sale

Lynch Company owns and operates a delivery van that originally cost $47,900. Lynch has recorded straight-line depreciation on the van for four years, calculated assuming a $5,000 expected salvage value at the end of its estimated six-year useful life. Depreciation was last recorded at the end of the fourth year, at which time Lynch disposes of this van.

a. Compute the net book value of the van on the disposal date.
$Answer 19300

  1. Compute the gain or loss on sale of the van if the disposal proceeds are:

Use a negative sign with your answer if the sale results in a loss.

  1. A cash amount equal to the van’s net book value. $Answer 0
  1. $21,800 cash. $Answer 2500
  1. $17,800 cash. $Answer -1500

 

Computing Asset Related Ratios

Dicks Sporting Goods included the following information in its year-end 2015 10-K

 

Sales $7,870,964
PPE, gross 2,787,536
Land
Construction in progress 124,400
Accumulated depreciation 1,317,429
PPE, net, at year-end 2014 1,203,382
Depreciation expense 193,594
  1. Compute PPE turnover.
    Round answer to one decimal place.
    Answer 5.9
  1. Compute the average useful life.
    Round answer to one decimal place.
    Answer 13.8 years

c. Compute the percentage used up of the PPE.
Round answer to one decimal place (ex: 0.2345 = 23.5%)
Answer 49.5%

 

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