FA Mod 6 Sale of equipment practice exam questions


FA Mod 6 Sale of equipment practice exam questions

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FA Module 6 Sale of equipment practice exam questions

(The attached PDF file has better formatting.)

A firm reports the following financial statement figures:

    Calendar Year 20XX-1    Calendar Year 20XX
Depreciation expense (equipment)    17    19
Gain (loss) on sale of equipment     15    -19
    December 31, 20XX-1    December 31, 20XX
Equipment (historical cost)    434    479
Accumulated depreciation on equipment    218    231


On December 31, 20XX, the firm paid 139 to buy new equipment.

Question 6.2: Historical cost of equipment

What is the change in the historical cost of equipment in 20X2?

Answer 6.2: 479 – 434 = 45


Question 6.3: Historical cost of equipment sold

What is the historical cost of the equipment sold in 20X2?

Answer 6.3: 139 – 45 = 94

(historical cost of equipment sold = cost of equipment bought – Δ(historical cost of equipment) )


Question 6.4: Accumulated depreciation

What is the change in the accumulated depreciation for equipment from 12/31/20X1 to 12/31/20X2?

Answer 6.4: 231 – 218 = 13


Question 6.5: Accumulated depreciation for equipment sold

What was the accumulated depreciation for the equipment sold in 20X2?

Answer 6.5: 19 – 13 = 6

(accumulated depreciation for the equipment sold = depreciation expense – Δ(accumulated depreciation) )


Question 6.6: Sales price

What was the sales price of the equipment sold in 20X2?

Answer 6.6: 94 – 6 – 19 = 69

(sales price = historical cost of equipment sold – accumulated depreciation on equipment sold + gain (loss) on sale)

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