Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000. Required: 1. What is the annual amount of depreciation for the first three years, assuming the straight-line method of depreciation is used? Depreciation Expense Year 1 %24 Year 2 $4 Year 3 %24 2. What is the book value of the equipment on January 1, Year 4? 3. Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. 4. Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000. Required: 1. What is the annual amount of depreciation for the first three years, assuming the straight-line method of depreciation is used? Depreciation Expense Year 1 %24 Year 2 $4 Year 3 %24 2. What is the book value of the equipment on January 1, Year 4? 3. Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. 4. Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 3CE: A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years....
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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:7. EX.09.218
Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000.
Required:
1. What is the annual amount of depreciation for the first three years, assuming the straight-line method of depreciation is used?
Depreciation Expense
Year 1
Year 2
Year 3
2. What is the book value of the equipment on January 1, Year 4?
3. Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
4. Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
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VIEW1. What is the annual amount of depreciation for first three years, using straight line method
VIEW2. What is the book value of equipment on Jan 01, year 4?
VIEW3. Journalize entry to record of sale, assuming equipment sold for 326,000
VIEW4. Journalize entry to record sale, assuming sale value is 394000
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