You are reviewing the financial statements of three companies in the same industry. Specifically, you are interested in the transactions surrounding capital assets during the past year. The following information is available for the three companies.
| Apple Co. | Banana Co. | Cherry Co. | |
| Beginning capital assets, net of depreciation | $850,500 | $712,200 | $488,300 |
| Ending capital assets, net of depreciation | 960,000 | 706,800 | 284,400 |
| Depreciation expense | 65,200 | 49,300 | (c) |
| Gain (loss) on sale of capital assets | 5,500 | (b) | (16,800) |
| Costs of capital assets acquired | 230,600 | 128,000 | 55,600 |
| Proceeds from sale of capital assets | (a) | 72,500 | 184,900 |
Required
To analyze and compute the unknowns in the financial statements of Apple Co., Banana Co., and Cherry Co. regarding their capital assets for the past year, we’ll examine the provided information and calculate the missing values. Capital assets represent a significant part of a company’s financial position, and understanding their transactions is crucial for evaluating a company’s performance.
Apple Co.
Beginning capital assets, net of depreciation: $850,500
Ending capital assets, net of depreciation: $960,000
Depreciation expense: $65,200
Gain (loss) on sale of capital assets: $5,500
Costs of capital assets acquired: $230,600
Proceeds from sale of capital assets (a): Unknown
To compute the proceeds from the sale of capital assets (a) for Apple Co., we can use the formula:
Proceeds from sale of capital assets (a) = Beginning capital assets + Costs of capital assets acquired – Ending capital assets – Depreciation expense + Gain (loss) on sale of capital assets
Proceeds from sale of capital assets (a) = $850,500 + $230,600 – $960,000 – $65,200 + $5,500 Proceeds from sale of capital assets (a) = $21,400
Therefore, Apple Co. had proceeds of $21,400 from the sale of capital assets during the past year.
Banana Co.
Be from sale of capital assets: $72,500
To compute the gain (loss) on the sale of capital assets (b) for Banana Co., we can use the formula:
Gain (loss) on sale of capital assets (b) = Proceeds from sale of capital assets – Beginning capital assets + Depreciation expense – Costs of capital assets acquired
Gain (loss) on sale of capital assets (b) = $72,500 – $712,200 + $49,300 – $128,000 Gain (loss) on sale of capital assets (b) = -$718,400
Banana Co. incurred a loss of $718,400 on the sale of capital assets during the past year.
Cherry Co.
Beginning capital assets, net of depreciation: $488,300
Ending capital assets, net of depreciation: $284,400
Depreciation expense: Unknown (c)
Gain (loss) on sale of capital assets: ($16,800)
Costs of capital assets acquired: $55,600
Proceeds from sale of capital assets: $184,900
To compute the depreciation expense (c) for Cherry Co., we can use the formula:
Depreciation expense (c) = Beginning capital assets – Ending capital assets + Gain (loss) on sale of capital assets + Costs of capital assets acquired – Proceeds from sale of capital assets
Depreciation expense (c) = $488,300 – $284,400 – ($16,800) + $55,600 – $184,900 Depreciation expense (c) = $57,800
Therefore, Cherry Co. had a depreciation expense of $57,800 during the past year.
In conclusion, we have computed the missing values for the three companies‘ capital asset transactions:
Apple Co. had proceeds of $21,400 from the sale of capital assets.
Banana Co. incurred a loss of $718,400 on the sale of capital assets.
Cherry Co. had a depreciation expense of $57,800 during the past year.
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