Net income for Parton Company for 2014 includes the effect of the following transactions involving the sale of fixed assets:

Purchases of fixed assets during 2014 amounted to $340,000.The Accumulated Depreciation account increased $40,000 during 2014.How much was depreciation expense for 2014?
A)$175,000
B)$187,000
C)$197,000
D)$215,000

Question

Net income for Parton Company for 2014 includes the effect of the following transactions involving the sale of fixed assets:

Purchases of fixed assets during 2014 amounted to $340,000.The Accumulated Depreciation account increased $40,000 during 2014.How much was depreciation expense for 2014?
A)$175,000 
B)$187,000 
C)$197,000 
D)$215,000

Quizplus · Accepted Answer

Depreciation Expense = Purchases of Fixed Assets - Accumulated Depreciation Increase
Depreciation Expense = $340,000 - $40,000 = $300,000
Plus the $17,000 gain on sale of fixed assets gives a net effect on income of $317,000. Therefore, the net income for 2014 is:
$1,100,000 + $317,000 = $1,417,000. 
Thus, the correct answer is (C) $197,000.

Net Income for Parton Company for 2014 Includes the Effect