Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000. Required: 1. What is the annual amount of depreciation for the first three years, assuming the straight-line method of depreciation is used? Depreciation Expense Year 1 $fill in the blank 3b987ff9206ffcf_1 Year 2 $fill in the blank 3b987ff9206ffcf_2 Year 3 $fill in the blank 3b987ff9206ffcf_3 2. What is the book value of the equipment on January 1, Year 4? $fill in the blank 3b987ff9206ffcf_4 3. Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Cash Cash Accumulated Depreciation-Equipment Accumulated Depreciation-Equipment Loss on Sale of Equipment Loss on Sale of Equipment Equipment Equipment 4. Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Cash Cash Accumulated Depreciation-Equipment Accumulated Depreciation-Equipment Equipment Equipment Gain on Sale of Equipment Gain on Sale of Equipment
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.
Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000.
Required:
1. What is the annual amount of
| Depreciation Expense | |
| Year 1 | $fill in the blank 3b987ff9206ffcf_1 |
| Year 2 | $fill in the blank 3b987ff9206ffcf_2 |
| Year 3 | $fill in the blank 3b987ff9206ffcf_3 |
2. What is the book value of the equipment on January 1, Year 4?
$fill in the blank 3b987ff9206ffcf_4
3. Assuming that the equipment is sold on January 2, Year 4, for $326,000,
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|
Cash | Cash | |
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Accumulated Depreciation-Equipment | ||
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Loss on Sale of Equipment | Loss on Sale of Equipment | |
|
|
Equipment | Equipment |
4. Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
|
|
Cash | Cash | |
|
|
Accumulated Depreciation-Equipment | Accumulated Depreciation-Equipment | |
|
|
Equipment | Equipment | |
|
|
Gain on Sale of Equipment | Gain on Sale of Equipment |
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