Lovell Company reported the following information related to its long-term assets: Property, plant, and equipment, beginning balance $230,000 Property, plant, and equipment, ending balance 260,000 Accumulated depreciation, beginning balance 81,000 Accumulated depreciation, ending balance 79,000 Depreciation expense 9,500 In addition, the company disclosed that it sold equipment with a historical cost of $25,000 for $21,000. Using this information, compute cash paid for property, plant, and equipment.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Lovell Company reported the following information related to its long-term assets:
Property, plant, and equipment, beginning balance $230,000
Property, plant, and equipment, ending balance 260,000
Accumulated
Accumulated depreciation, ending balance 79,000
Depreciation expense 9,500
In addition, the company disclosed that it sold equipment with a historical cost of $25,000 for $21,000.
Using this information, compute cash paid for property, plant, and equipment.
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