Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $612,500.
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.
Sale of Equipment
Equipment was acquired at the beginning of the year at a cost of $612,500. The equipment was
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(loss) on the sale of the equipment, assuming it was sold at the end of year eight for $106,489.
Round your answer to the nearest cent and enter as a positive amount.
$Loss
c.
| Cash | |||
| Loss on Sale of Equipment | |||
| Equipment |
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