Equipment acquired on January 6 at a cost of $198,700, has an estimated useful life of 9 years and an estimated residual value of $25,900. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Year Depreciation Expense Year 1 Year 2 $ Year 3 $ b. What was the book value of the equipment on January 1 of Year 4? c. Assuming that the equipment was sold on January 3 of Year 4 for $134,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
Equipment acquired on January 6 at a cost of $198,700, has an estimated useful life of 9 years and an estimated residual value of $25,900. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Year Depreciation Expense Year 1 Year 2 $ Year 3 $ b. What was the book value of the equipment on January 1 of Year 4? c. Assuming that the equipment was sold on January 3 of Year 4 for $134,000, 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:Equipment acquired on January 6 at a cost of $198,700, has an estimated useful life of 9 years and an estimated residual value of $25,900.
a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation?
Year
Depreciation Expense
Year 1
Year 2
2$
Year 3
b. What was the book value of the equipment on January 1 of Year 4?
$4
c. Assuming that the equipment was sold on January 3 of Year 4 for $134,000, journalize the entry to record the sale. If an amount box does not require an entry, leave
it blank.
d. Assuming that the equipment had been sold on January 3 of Year 4 for $143,900 instead of $134,000, journalize the entry to record the sale. If an amount box does
not require an entry, leave it blank.
000
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