Haliburton Paddle Works Ltd., year 2: net income 72,000; amortization expense 34,000 (accumulated amortization at year end 118,000); equipment with a carrying amount of 28,000 was sold for $26,000. Complete the opening lines of the indirect operating section.
Haliburton Paddle Works Ltd., year 2: net income 72,000; amortization expense 34,000 (accumulated amortization at year end 118,000); equipment with a carrying amount of 28,000 was sold for $26,000. Complete the opening lines of the indirect operating section.
Answer
Net income → 72000 · Add: amortization → 34000 · Add: loss on disposal of equipment → 2000
Cells - Net income · ±0 - Add: amortization · ±0 - Add: loss on disposal of equipment · ±0 Start from **net income 72,000**. Add back the year’s **amortization expense 34,000** (the 118,000 balance is every year’s). The disposal: proceeds 26,000 − carrying amount 28,000 = a **loss of 2,000**, added back because the cash effect (26,000) is reported in investing. Subtotal 108,000.
Hermanson Vol 1 ch 16 (the gain/loss logic); Dauderis & Annand §11.2 (journal anatomy); Lyryx Intermediate FA Vol 1 §4.3; OpenStax Vol 1 16.3 (concept map N4–N6)