Why should I choose AnalystNotes?

AnalystNotes specializes in helping candidates pass. Period.

Basic Question 1 of 9

Nepster Inc. provides the following information from its accrual-basis financial statements:

1/1 Buildings (net): $280,000
12/31 Buildings (net): $300,000
Depreciation Expense: $25,000

How much did Nepster pay for buildings during the year if buildings with a book value of $40,000 were disposed of during the year?

A. $45,000
B. $65,000
C. $85,000

User Contributed Comments 6

User Comment
Jmiller74 The question is written incomplete, it does not mention the change in the book value by 20K.
John1965 Yes it is complete: the 20,000 comes from 300,000 - 280,000.
johntan1979 There is no change in book value whatsoever.

Book value of disposed asset = $40,000

$20,000 is Ending building - Beginning building = $300k - $280k
farhan92 took me a minute or so to find the book value -.-
ascruggs92 Start 280,000
Less: Depreciation Exp. (25,000)
Less: Disposal of Assets (40,000)
Buildings Acct. Balance before purchases 215,000
Purchases 85,000
Ending Balance: 300,000
cfastudypl using the fixed asset t-account: closing balance 300k + depreciation 25k + disposal value 40k less opening balance 280k = 85k(300+25+40-280)
You need to log in first to add your comment.
Your review questions and global ranking system were so helpful.
Lina

Lina

Learning Outcome Statements

explain the derecognition of property, plant, and equipment and intangible assets;

explain and evaluate how impairment, revaluation, and derecognition of property, plant, and equipment and intangible assets affect financial statements and ratios;

CFA® 2024 Level I Curriculum, Volume 3, Module 23.