Depreciation by Two Methods; Sale of Fixed Asset New lithographic equipment, acquired at a cost of $687,500 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 $59,100. 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 $100,700. 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 02308c0c0011fb2_1 $fill in the blank 02308c0c0011fb2_2 $fill in the blank 02308c0c0011fb2_3 2 $fill in the blank 02308c0c0011fb2_4 $fill in the blank 02308c0c0011fb2_5 $fill in the blank 02308c0c0011fb2_6 3 $fill in the blank 02308c0c0011fb2_7 $fill in the blank 02308c0c0011fb2_8 $fill in the blank 02308c0c0011fb2_9 4 $fill in the blank 02308c0c0011fb2_10 $fill in the blank 02308c0c0011fb2_11 $fill in the blank 02308c0c0011fb2_12 5 $fill in the blank 02308c0c0011fb2_13 $fill in the blank 02308c0c0011fb2_14 $fill in the blank 02308c0c0011fb2_15 b. Double-declining-balance method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $fill in the blank 02308c0c0011fb2_16 $fill in the blank 02308c0c0011fb2_17 $fill in the blank 02308c0c0011fb2_18 2 $fill in the blank 02308c0c0011fb2_19 $fill in the blank 02308c0c0011fb2_20 $fill in the blank 02308c0c0011fb2_21 3 $fill in the blank 02308c0c0011fb2_22 $fill in the blank 02308c0c0011fb2_23 $fill in the blank 02308c0c0011fb2_24 4 $fill in the blank 02308c0c0011fb2_25 $fill in the blank 02308c0c0011fb2_26 $fill in the blank 02308c0c0011fb2_27 5 $fill in the blank 02308c0c0011fb2_28 $fill in the blank 02308c0c0011fb2_29 $fill in the blank 02308c0c0011fb2_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. fill in the blank 7a487df90069fec_2 fill in the blank 7a487df90069fec_3 fill in the blank 7a487df90069fec_5 fill in the blank 7a487df90069fec_6 fill in the blank 7a487df90069fec_8 fill in the blank 7a487df90069fec_9 fill in the blank 7a487df90069fec_11 fill in the blank 7a487df90069fec_12 3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $86,400 instead of $100,700. If an amount box does not require an entry, leave it blank. fill in the blank ceab2102a03dfa3_2 fill in the blank ceab2102a03dfa3_3 fill in the blank ceab2102a03dfa3_5 fill in the blank ceab2102a03dfa3_6 fill in the blank ceab2102a03dfa3_8 fill in the blank ceab2102a03dfa3_9 fill in the blank ceab2102a03dfa3_11 fill in the blank ceab2102a03dfa3_12
Depreciation by Two Methods; Sale of Fixed Asset New lithographic equipment, acquired at a cost of $687,500 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 $59,100. 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 $100,700. 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 02308c0c0011fb2_1 $fill in the blank 02308c0c0011fb2_2 $fill in the blank 02308c0c0011fb2_3 2 $fill in the blank 02308c0c0011fb2_4 $fill in the blank 02308c0c0011fb2_5 $fill in the blank 02308c0c0011fb2_6 3 $fill in the blank 02308c0c0011fb2_7 $fill in the blank 02308c0c0011fb2_8 $fill in the blank 02308c0c0011fb2_9 4 $fill in the blank 02308c0c0011fb2_10 $fill in the blank 02308c0c0011fb2_11 $fill in the blank 02308c0c0011fb2_12 5 $fill in the blank 02308c0c0011fb2_13 $fill in the blank 02308c0c0011fb2_14 $fill in the blank 02308c0c0011fb2_15 b. Double-declining-balance method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $fill in the blank 02308c0c0011fb2_16 $fill in the blank 02308c0c0011fb2_17 $fill in the blank 02308c0c0011fb2_18 2 $fill in the blank 02308c0c0011fb2_19 $fill in the blank 02308c0c0011fb2_20 $fill in the blank 02308c0c0011fb2_21 3 $fill in the blank 02308c0c0011fb2_22 $fill in the blank 02308c0c0011fb2_23 $fill in the blank 02308c0c0011fb2_24 4 $fill in the blank 02308c0c0011fb2_25 $fill in the blank 02308c0c0011fb2_26 $fill in the blank 02308c0c0011fb2_27 5 $fill in the blank 02308c0c0011fb2_28 $fill in the blank 02308c0c0011fb2_29 $fill in the blank 02308c0c0011fb2_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. fill in the blank 7a487df90069fec_2 fill in the blank 7a487df90069fec_3 fill in the blank 7a487df90069fec_5 fill in the blank 7a487df90069fec_6 fill in the blank 7a487df90069fec_8 fill in the blank 7a487df90069fec_9 fill in the blank 7a487df90069fec_11 fill in the blank 7a487df90069fec_12 3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $86,400 instead of $100,700. If an amount box does not require an entry, leave it blank. fill in the blank ceab2102a03dfa3_2 fill in the blank ceab2102a03dfa3_3 fill in the blank ceab2102a03dfa3_5 fill in the blank ceab2102a03dfa3_6 fill in the blank ceab2102a03dfa3_8 fill in the blank ceab2102a03dfa3_9 fill in the blank ceab2102a03dfa3_11 fill in the blank ceab2102a03dfa3_12
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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New lithographic equipment, acquired at a cost of $687,500 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 $59,100. 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 $100,700.
Required:
1. Determine the annual depreciation expense for each of the estimated five years of use, the
a. Straight-line method
| Year | Depreciation Expense |
Accumulated Depreciation, End of Year |
Book Value, End of Year |
| 1 | $fill in the blank 02308c0c0011fb2_1 | $fill in the blank 02308c0c0011fb2_2 | $fill in the blank 02308c0c0011fb2_3 |
| 2 | $fill in the blank 02308c0c0011fb2_4 | $fill in the blank 02308c0c0011fb2_5 | $fill in the blank 02308c0c0011fb2_6 |
| 3 | $fill in the blank 02308c0c0011fb2_7 | $fill in the blank 02308c0c0011fb2_8 | $fill in the blank 02308c0c0011fb2_9 |
| 4 | $fill in the blank 02308c0c0011fb2_10 | $fill in the blank 02308c0c0011fb2_11 | $fill in the blank 02308c0c0011fb2_12 |
| 5 | $fill in the blank 02308c0c0011fb2_13 | $fill in the blank 02308c0c0011fb2_14 | $fill in the blank 02308c0c0011fb2_15 |
b. Double-declining-balance method
| Year | Depreciation Expense |
Accumulated Depreciation, End of Year |
Book Value, End of Year |
| 1 | $fill in the blank 02308c0c0011fb2_16 | $fill in the blank 02308c0c0011fb2_17 | $fill in the blank 02308c0c0011fb2_18 |
| 2 | $fill in the blank 02308c0c0011fb2_19 | $fill in the blank 02308c0c0011fb2_20 | $fill in the blank 02308c0c0011fb2_21 |
| 3 | $fill in the blank 02308c0c0011fb2_22 | $fill in the blank 02308c0c0011fb2_23 | $fill in the blank 02308c0c0011fb2_24 |
| 4 | $fill in the blank 02308c0c0011fb2_25 | $fill in the blank 02308c0c0011fb2_26 | $fill in the blank 02308c0c0011fb2_27 |
| 5 | $fill in the blank 02308c0c0011fb2_28 | $fill in the blank 02308c0c0011fb2_29 | $fill in the blank 02308c0c0011fb2_30 |
2.
| fill in the blank 7a487df90069fec_2 | fill in the blank 7a487df90069fec_3 | ||
| fill in the blank 7a487df90069fec_5 | fill in the blank 7a487df90069fec_6 | ||
| fill in the blank 7a487df90069fec_8 | fill in the blank 7a487df90069fec_9 | ||
| fill in the blank 7a487df90069fec_11 | fill in the blank 7a487df90069fec_12 |
3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $86,400 instead of $100,700. If an amount box does not require an entry, leave it blank.
| fill in the blank ceab2102a03dfa3_2 | fill in the blank ceab2102a03dfa3_3 | ||
| fill in the blank ceab2102a03dfa3_5 | fill in the blank ceab2102a03dfa3_6 | ||
| fill in the blank ceab2102a03dfa3_8 | fill in the blank ceab2102a03dfa3_9 | ||
| fill in the blank ceab2102a03dfa3_11 | fill in the blank ceab2102a03dfa3_12 |
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