The following is from the 2018 annual report of kaufman chemicals, inc.: statements of comprehensive income years ended december 31 2018 2017 2016 net income $ 856 $ 766 $ 594 other comprehensive income: change in net unrealized gains on investments, net of tax of $22, ($14), and $15 in 2018, 2017, and 2016, respectively 34 (21 ) 23 other (2 ) (1 ) 1 total comprehensive income $ 888 $ 744 $ 618 kaufman reports accumulated other comprehensive income in its balance sheet as a component of shareholders' equity as follows: ($ in millions) 2018 2017 shareholders’ equity: common stock 355 355 additional paid-in capital 8,567 8,567 retained earnings 6,544 5,988 accumulated other comprehensive income 107 75 total shareholders’ equity $ 15,573 $ 14,985 required: 4. from the information provided, determine how kaufman calculated the $107 million accumulated other comprehensive income in 2018.

A. $134,000

B1. Dr Depreciation expense$2,125

Cr Accumulated depreciation- equipment $2,125

B2. Dr Cash$125,000

Dr Loss on sale of equipment$6,875

Dr Accumulated depreciation- equipment$36,125

Cr Equipment $168,000

Explanation:

A. Calculation to determine What was the book value of the equipment at December 31 the end of the fourth year

First step is to calculate the Annual depreciation using this formula

Annual depreciation = (Cost of machinery-Residual value)/ useful life

Let plug in the formula

Annual depreciation= (168,000-15,000)/18

Annual depreciation= $8,500

Second step is to calculate the Accumulated depreciation for 4 years using this formula

Accumulated depreciation for 4 years = Annual depreciation x 4

Let plug in the formula

Accumulated depreciation for 4 years= 8,500 x 4

Accumulated depreciation for 4 years= $34,000

Now let determine the Book value of equipment at December 31 at the end of year

Using this formula

Book value of equipment at December 31 at the end of year 4 = Cost of equipment - Accumulated depreciation for 4 years

Let plug in the formula

Book value of equipment at December 31 at the end of year = 168,000-34,000

Book value of equipment at December 31 at the end of year = $134,000

Therefore the book value of the equipment at December 31 the end of the fourth year is $134,000

B1. Preparation of the journal entries to record (1) depreciation for the three months until the sale date

Year 5, April 1

Dr Depreciation expense$2,125

Cr Accumulated depreciation- equipment $2,125

( To record depreciation expense)

Calculation for Depreciation for 3 months of year 5 using this formula

Depreciation for 3 months of year 5 = Annual depreciation x 3/12

Let plug in the formula

Depreciation for 3 months of year 5 == 8,500 x 3/12

Depreciation for 3 months of year 5 = $2,125

B2.Preparation of the journal entries to record (2) the sale of the equipment.

Year 5, April 1

Dr Cash$125,000

Dr Loss on sale of equipment$6,875

Dr Accumulated depreciation- equipment$36,125

Cr Equipment $168,000

( To record sale of the equipment)

Calculation for Accumulated depreciation at April 1, year 5 using this formula

Accumulated depreciation at April 1, year 5 = Accumulated depreciation for 4 years + Depreciation for 3 months of year 5

Let plug in the formula

Accumulated depreciation at April 1, year 5= 34,000+2,125

Accumulated depreciation at April 1, year 5= $36,125

Calculation for Book value of equipment at April 1, year 5 using this formula

Book value of equipment at April 1, year 5 = Cost of equipment - Accumulated depreciation at April 1, year 5

Let plug in the formula

Book value of equipment at April 1, year 5 = $168,000-$36,125

Book value of equipment at April 1, year 5 = $131,875

Calculation for Loss on sale of equipment using this formula

Loss on sale of equipment = Book value - Sale of equipment

Let plug in the formula

Loss on sale of equipment=$ 131,875-$125,000

Loss on sale of equipment= $6,875

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