---### Depreciation and Sale of Equipment**Problem Statement:**Equipment was acquired at the beginning of the year at a cost of $76,380. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,620.---#### Questions:**a. What was the depreciation expense for the first year?**\[$\]**b. Assuming the equipment was sold at the end of the second year for $57,700, determine the gain or loss on sale of the equipment.**\[$\] \[ \]**c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank or enter "0".**\[\begin{array}{|c|c|}\hline\text{Account Title} & \text{Debit} \\\hline\text{[Dropdown]} & \text{\$[Input]} \\\text{[Dropdown]} & \text{\$[Input]} \\\text{[Dropdown]} & \text{\$[Input]} \\\text{[Dropdown]} & \text{\$[Input]} \\\hline\text{Account Title} & \text{Credit} \\\hline\text{[Dropdown]} & \text{\$[Input]} \\\text{[Dropdown]} & \text{\$[Input]} \\\hline\end{array}\]---**Explanation of the Straight-Line Depreciation Method:**The straight-line method depreciates an asset by an equal amount each year over its useful life. The formula used is:\[ \text{Depreciation Expense} = \frac{\text{Cost} - \text{Residual Value}}{\text{Useful Life}} \]In this scenario:- Cost of the equipment = $76,380- Residual value = $7,620- Useful life = 6 yearsThe depreciation expense per year would be calculated as:\[ \text{Depreciation Expense} = \frac{76,380 - 7,620}{6} = \frac{68,760}{6} = \$11,460 \]**Understanding Gains and Losses on Asset Sale:**When an asset is sold, the gain or loss is determined by comparing the

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Description: ---### Depreciation and Sale of Equipment**Problem Statement:**Equipment was acquired at the beginning of the year at a cost of $76,380. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and

Formula Depreciation under straight line method = Asset cost - salvage value / useful life

Business

Accounting

Equipment was acquired at the beginning of the year at a cost of $76,380. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,620. a. What was the depreciation expense for the first year? $ b. Assuming the equipment was sold at the end of the second year for $57,700, determine the gain or loss on sale of the equipment. ▼ c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank or enter "0".

Equipment was acquired at the beginning of the year at a cost of $76,380. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,620. a. What was the depreciation expense for the first year? $ b. Assuming the equipment was sold at the end of the second year for $57,700, determine the gain or loss on sale of the equipment. ▼ c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank or enter "0".

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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