ACC 110 Lecture Notes - Net Income, Human Capital, 6 Years
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Gst paid for assets used for commercial activities are recoverable by an input tax credit. *it"s assumed everything was paid in cash; other assumptions are reasonable. b. The depreciation expense in year 6 brings the carrying amount to the residual value at the end of the year: the machine is sold at the end of year 3 for ,000. The entry for the year 3 depreciation expense would be made before the gain or loss is calculated. To record the depreciation expense for year 3. To record the sale of the machine in year 3 for ,000. [note that all costs except for the service contract, which is an operating cost, are capitalized. ] b. ,680: the new computer equipment is sold at the end of 2016 for ,000. 2016 depreciation expense would be made before the gain or loss is calculated. At the time of sale, it would be first necessary to record depreciation for the third year: