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3 July, 05:48

Ichor Co. reported equipment with an original cost of $379,000 and $344,000 and accumulated depreciation of $153,000 and $128,000, respectively, in its comparative financial statements for the years ended December 31, 20X5 and 20X4. During 20X5, Ichor purchased equipment costing $50,000 and sold equipment with a carrying value of $9,000. What amount should Ichor report as depreciation expense for 20X5? A. $19,000

B. $25,000

C. $31,000

D. $34,000

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  1. 3 July, 05:56
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    C. $31,000

    Explanation:

    The computation of the depreciation expense is shown below:

    Net balance of the equipment on the year 20X5

    = Original cost - accumulated depreciation

    = $379,000 - $153,000

    = $226,000

    Net balance of the equipment on the year 20X4

    = Original cost - accumulated depreciation

    = $344,000 - $128,000

    = $216,000

    So, the difference is $10,000

    And, in 20X5, the loss on sale of equipment is

    = $50,000 - $9,000

    = $41,000

    Now the depreciation expense is

    = $41,000 - $10,000

    = $31,000
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