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The balance in PP&E on Company A’s Year 1 Balance Sheet is $20,000. The company purchase PP&E of $37,000 during Year 2. Depreciation expense recorded during Year 2 totaled 5,000. The company sold some equipment with a net book value of $2,000. What is the balance in PP&E on the Year 2 Balance Sheet? Assuming no other transactions affected the account during the year.

 
 
 
 
 
 

Correct answer. The Ending Balance in PP&E (?) = the Beginning Balance in PP&E 20,000 + Purchase of PP&E 37,000 – Depreciation Expense 5,000 – Net Book Value of PP&E Disposed 2,000 = 50,000.

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