Instructions Equipment was acquired at the beginning of the year at a cost of $550,000. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of 9 years and an estimated residual value of $46,070. Required: a. What was the depreciation for the first year? Round your intermediate calculations to 4 decimal places. Round the depreciation for the year to the nearest whole dollar. b. Assuming that the equipment was sold at the end of the second year for $542,850, determine the gain or loss on the sale of the equipment. c. Journalize the entry on Dec. 31 to record the sale. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
Instructions Equipment was acquired at the beginning of the year at a cost of $550,000. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of 9 years and an estimated residual value of $46,070. Required: a. What was the depreciation for the first year? Round your intermediate calculations to 4 decimal places. Round the depreciation for the year to the nearest whole dollar. b. Assuming that the equipment was sold at the end of the second year for $542,850, determine the gain or loss on the sale of the equipment. c. Journalize the entry on Dec. 31 to record the sale. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Instructions
Equipment was acquired at the beginning of the year at a cost of $550,000. The equipment was depreciated using the double-declining-balance method based on an estimated useful
life of 9 years and an estimated residual value of $46,070.
Required:
a. What was the depreciation for the first year? Round your intermediate calculations to 4 decimal places. Round the depreciation for the
year to the nearest whole dollar.
b. Assuming that the equipment was sold at the end of the second year for $542,850, determine the gain or loss on the sale of the equipment.
c. Journalize the entry on Dec. 31 to record the sale. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do
not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a
credit entry when a credit amount is entered.
Transcribed Image Text:Sale of Equipment
Equipment was acquired at the beginning of the year at a cost of $662,500. The equipment was depreciated using the straight-line method based on an estimated useful
life of 9 years and an estimated residual value of $44,740.
a. What was the depreciation for the first year? Round your answer to the nearest cent.
b. Using the rounded amount from Part a in your computation, determine the gain or loss on the sale of the equipment, assuming it was sold at the end of year eight fo
$107,060. Round your answer to the nearest cent. Enter your answer as a positive amount.
c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.
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