New lithographic equipment, acquired at a cost of $656,250 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $56,400. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $96,100. Required: 1.  Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a.  Straight-line method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $fill in the blank f3adbb01f07801f_1 $fill in the blank f3adbb01f07801f_2 $fill in the blank f3adbb01f07801f_3 2 $fill in the blank f3adbb01f07801f_4 $fill in the blank f3adbb01f07801f_5 $fill in the blank f3adbb01f07801f_6 3 $fill in the blank f3adbb01f07801f_7 $fill in the blank f3adbb01f07801f_8 $fill in the blank f3adbb01f07801f_9 4 $fill in the blank f3adbb01f07801f_10 $fill in the blank f3adbb01f07801f_11 $fill in the blank f3adbb01f07801f_12 5 $fill in the blank f3adbb01f07801f_13 $fill in the blank f3adbb01f07801f_14 $fill in the blank f3adbb01f07801f_15 b.  Double-declining-balance method   Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $fill in the blank f3adbb01f07801f_16 $fill in the blank f3adbb01f07801f_17 $fill in the blank f3adbb01f07801f_18 2 $fill in the blank f3adbb01f07801f_19 $fill in the blank f3adbb01f07801f_20 $fill in the blank f3adbb01f07801f_21 3 $fill in the blank f3adbb01f07801f_22 $fill in the blank f3adbb01f07801f_23 $fill in the blank f3adbb01f07801f_24 4 $fill in the blank f3adbb01f07801f_25 $fill in the blank f3adbb01f07801f_26 $fill in the blank f3adbb01f07801f_27 5 $fill in the blank f3adbb01f07801f_28 $fill in the blank f3adbb01f07801f_29 $fill in the blank f3adbb01f07801f_30 2.  Journalize the entry to record the sale assuming that the manager chose the double declining-balance method. If an amount box does not require an entry, leave it blank.   Cash  fill in the blank 3b25f1f29fe003c_2 fill in the blank 3b25f1f29fe003c_3   Equipment  fill in the blank 3b25f1f29fe003c_5 fill in the blank 3b25f1f29fe003c_6     fill in the blank 3b25f1f29fe003c_8 fill in the blank 3b25f1f29fe003c_9     fill in the blank 3b25f1f29fe003c_11 fill in the blank 3b25f1f29fe003c_12 3.  Journalize the entry to record the sale in (2) assuming that the equipment was sold for $82,500 instead of $96,100. If an amount box does not require an entry, leave it blank.     fill in the blank 7cdd0bf67fe9fe6_2 fill in the blank 7cdd0bf67fe9fe6_3     fill in the blank 7cdd0bf67fe9fe6_5 fill in the blank 7cdd0bf67fe9fe6_6     fill in the blank 7cdd0bf67fe9fe6_8 fill in the blank 7cdd0bf67fe9fe6_9     fill in the blank 7cdd0bf67fe9fe6_11 fill in the blank 7cdd0bf67fe9fe6_12

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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.