Fireworks City
Information for Year 2 and Year 1 is presented below for Fireworks City, which uses the straight-line depreciation method. $$\begin{array} { l r r }
& \underline{ \text { Year 2} } & \underline{\text { Year 1 }} \
\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 { Total assets } &625,000&475,000\

\end{array}$$
-Refer to the figure Fireworks City.During the year,the company sold some equipment that had an original cost of $60,000.Which of the following transactions must also have occurred during the period?

Question

Fireworks City
Information for Year 2 and Year 1 is presented below for Fireworks City, which uses the straight-line depreciation method. $$\begin{array} { l r r } 
 & \underline{ \text { Year 2} } &  \underline{\text { Year 1 }} \
\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 { Total assets }  &625,000&475,000\

\end{array}$$
-Refer to the figure Fireworks City.During the year,the company sold some equipment that had an original cost of $60,000.Which of the following transactions must also have occurred during the period?

Quizplus · Accepted Answer

When a company sells equipment that had an original cost of $60,000, it does not necessarily mean that the selling price is reported with net sales or that the equipment hadn't been reported with the company's property, plant, and equipment. The sale of equipment could lead to the company purchasing additional equipment, either to replace the sold asset or to upgrade its asset base.

Fireworks City Information for Year 2 and Year 1 Is

Fireworks City
Information for Year 2 and Year 1 Is