Use the information presented below for Chambersburg Corp.for 2017 and 2016 to answer the questions that follow.Chambersburg uses the straight-line depreciation method. $\begin{array}{lrr}
&\mathbf{2 0 1 7} & \mathbf{2 0 1 6} \
\text { Property, plant, and equipment }&\$ 250,000 & \$ 190,000 \
\text {Accumulated depreciation }&100,000 & 85,000 \
\text { Depreciation expense }&62,500 & 47,500 \
\text { Net sales }&1,000,000 & 900,000 \
\text { Average Total assets }&625,000 & 475,000\
\end{array}$
-Refer to the information for Chambersburg Corp. ?
Between 2016 and 2017, Chambersburg sold some equipment that had an original cost of $57,500.Which statement is most likely true concerning transactions that must have occurred during the period?
A) Chambersburg also purchased additional equipment during the year.
B) The selling price of the equipment sold was reported with net sales.
C) The equipment that was sold had a book value of $12,500.
D) The equipment sold had not been reported with Chambersburg's property, plant and equipment.

Question

Use the information presented below for Chambersburg Corp.for 2017 and 2016 to answer the questions that follow.Chambersburg uses the straight-line depreciation method. $\begin{array}{lrr}
&\mathbf{2 0 1 7} & \mathbf{2 0 1 6} \
\text { Property, plant, and equipment }&\$ 250,000 & \$ 190,000 \
\text {Accumulated depreciation }&100,000 & 85,000 \
\text { Depreciation expense }&62,500 & 47,500 \
\text { Net sales }&1,000,000 & 900,000 \
\text { Average Total assets }&625,000 & 475,000\
\end{array}$ ​
-Refer to the information for Chambersburg Corp. ?
Between 2016 and 2017, Chambersburg sold some equipment that had an original cost of $57,500.Which statement is most likely true concerning transactions that must have occurred during the period?
A) Chambersburg also purchased additional equipment during the year.
B) The selling price of the equipment sold was reported with net sales.
C) The equipment that was sold had a book value of $12,500.
D) The equipment sold had not been reported with Chambersburg's property, plant and equipment.

Quizplus · Accepted Answer

To determine that Chambersburg purchased additional equipment, we can analyze the changes in property, plant, and equipment (PPE) and accumulated depreciation. The PPE increased from $190,000 in 2016 to $250,000 in 2017, an increase of $60,000. However, they also sold equipment with an original cost of $57,500. If they had only sold equipment and not purchased any, the PPE would have decreased. The fact that PPE increased indicates that they must have purchased more equipment than they sold. Additionally, the depreciation expense increased by $15,000 ($62,500 in 2017 minus $47,500 in 2016), which also suggests new equipment was added because it contributed to the higher depreciation expense.

Use the Information Presented Below for Chambersburg Corp ​ -Refer to the Information for Chambersburg Corp

Use the Information Presented Below for Chambersburg Corp
-Refer to the Information for Chambersburg Corp