Assume 10% salvage value, 5yr estimated useful life, and assume the asset was purchased on May 1s* 2019 (assume co's year-end is Dec 31*). Machine purchase price = $325,000, cost to ship & install the machine $25,000. 1. For 2019 and 2020 only: Calculate Depreciation Exp using Straight Line, Double Declining Balance and Sum of the Year's Digits 2. For all 3 of the depreciation methods above, show the Net Book Value at the end of 2020 3. Using Straight Line Deprec, assume the co sold this asset on 4/30/21 for $280,000: a. calculate any gain or loss on the sale b. make the entry to record the sale of the asset

Assume 10% salvage value, 5yr estimated useful life, and assume the asset was purchased on May 1s* 2019 (assume co's year-end is Dec 31*). Machine purchase price = $325,000, cost to ship & install the machine $25,000. 1. For 2019 and 2020 only: Calculate Depreciation Exp using Straight Line, Double Declining Balance and Sum of the Year's Digits 2. For all 3 of the depreciation methods above, show the Net Book Value at the end of 2020 3. Using Straight Line Deprec, assume the co sold this asset on 4/30/21 for $280,000: a. calculate any gain or loss on the sale b. make the entry to record the sale of the asset

Name: Assume 10% salvage value, 5yr estimated useful life, and assume the a
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Description: Assume 10% salvage value, 5yr estimated useful life, and assume the asset was purchased onMay 1st 2019 (assume co's year-end is Dec 31st). Machine purchase price = $325,000, cost to5 of 6 ship & install the machine $25,000.1. For 2019 and 2020 only:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Assume 10% salvage value, 5yr estimated useful life, and assume the asset was purchased on
May 1st 2019 (assume co's year-end is Dec 31st). Machine purchase price = $325,000, cost to
5 of 6 ship & install the machine $25,000.
1. For 2019 and 2020 only: Calculate Depreciation Exp using Straight Line, Double
Declining Balance and Sum of the Year's Digits
2. For all 3 of the depreciation methods above, show the Net Book Value at the end of 2020
3. Using Straight Line Deprec, assume the co sold this asset on 4/30/21 for $280,000:
a. calculate any gain or loss on the sale
b. make the entry to record the sale of the asset

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