Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $36,750. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of ten years and an estimated residual value of $710. a. What was the depreciation for the first year? 7,208 X b. Assuming the equipment was sold at the end of year 2 for $8,490, determine the gain or loss on the sale of the equipment. 13,844 X Loss v Feedback Check My Work Book value is the asset cost minus accumulated depreciation. In the first year, the balance in the accumulated depreciation account is zero. Compare the book value to the sale price. If the book value is more than the sale price, the equipment was sold for a loss. If the book value is less than the sale price, the equipment was sold for a gain. c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Cash v 8,490 V Accumulated Depreciation-Equipment v 14,416 X Loss on Sale of Equipment v 13,844 X Equipment v 36,750 V Feedback Check My Work Be sure to record the selling price of the fixed asset. If the company no longer has the fixed asset what account(s) would need to be eliminated? Was there a gain or a loss on the sale? Feedback Check My Work
Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $36,750. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of ten years and an estimated residual value of $710. a. What was the depreciation for the first year? 7,208 X b. Assuming the equipment was sold at the end of year 2 for $8,490, determine the gain or loss on the sale of the equipment. 13,844 X Loss v Feedback Check My Work Book value is the asset cost minus accumulated depreciation. In the first year, the balance in the accumulated depreciation account is zero. Compare the book value to the sale price. If the book value is more than the sale price, the equipment was sold for a loss. If the book value is less than the sale price, the equipment was sold for a gain. c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Cash v 8,490 V Accumulated Depreciation-Equipment v 14,416 X Loss on Sale of Equipment v 13,844 X Equipment v 36,750 V Feedback Check My Work Be sure to record the selling price of the fixed asset. If the company no longer has the fixed asset what account(s) would need to be eliminated? Was there a gain or a loss on the sale? Feedback Check My Work
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:Sale of Equipment
Equipment was acquired at the beginning of the year at a cost of $36,750. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of ten years and an estimated residual value of $710.
a. What was the depreciation for the first year?
7,208
b. Assuming the equipment was sold at the end of year 2 for $8,490, determine the gain or loss on the sale of the equipment.
13,844
X
Loss v
Feedback
V Check My Work
Book value is the asset cost minus accumulated depreciation. In the first year, the balance in the accumulated depreciation account is zero.
Compare the book value to the sale price. If the book value is more than the sale price, the equipment was sold for a loss. If the book value is less than the sale price, the equipment was sold for a gain.
c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
Cash v
8,490
Accumulated Depreciation-Equipment v
14,416 X
Loss on Sale of Equipment v
13,844
Equipment v
36,750 V
Feedback
Check My Work
Be sure to record the selling price of the fixed asset. If the company no longer has the fixed asset what account(s) would need to be eliminated? Was there a gain or a loss on the sale?
Feedback
Check My Work
Partially correct
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