Equipment acquired on January 3, 2007, at a cost of $504,000, has an estimated useful life of 12 years, has an estimated residual value of $42,000, and is depreciated by the straight-line method. a. Prepare a working paper to support your answers. b. Assuming that the equipment was disposed on December 31, 2015, journalize the disposal entries c. Assuming that the equipment was sold on April 1, 2011, for $315,000, journalize the entries to record (1) depreciation for the three months until the sale date, and (2) the sale of the equipment. d. Assuming that the equipment was sold on April 1, 2011, for $420,000, journalize the entries to record (1) depreciation for the three months until the sale date, and (2) the sale of the equipment.

Equipment acquired on January 3, 2007, at a cost of $504,000, has an estimated useful life of 12 years, has an estimated residual value of $42,000, and is depreciated by the straight-line method. a. Prepare a working paper to support your answers. b. Assuming that the equipment was disposed on December 31, 2015, journalize the disposal entries c. Assuming that the equipment was sold on April 1, 2011, for $315,000, journalize the entries to record (1) depreciation for the three months until the sale date, and (2) the sale of the equipment. d. Assuming that the equipment was sold on April 1, 2011, for $420,000, journalize the entries to record (1) depreciation for the three months until the sale date, and (2) the sale of the equipment.

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Description: Equipment acquired on January 3, 2007, at a cost of $504,000, has an estimated usefullife of 12 years, has an estimated residual value of $42,000, and is depreciated by the straight-line method.a. Prepare a working paper to support your answers.b. As

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.6E

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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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