New lithographic equipment, acquired at a cost of $593,750 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $51,100. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, on March 4, the equipment was sold for $87,000. 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 Depreciation Accumulated Depreciation, Book Value, Year Expense End of Year End of Year 1 2 $ 3 24 $4 $ $ 2$ b. Double-declining-balance method Depreciation Accumulated Depreciation, Book Value, Year Expense End of Year End of Year 1 2 $ $
New lithographic equipment, acquired at a cost of $593,750 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $51,100. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. In the first week of the fifth year, on March 4, the equipment was sold for $87,000. 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 Depreciation Accumulated Depreciation, Book Value, Year Expense End of Year End of Year 1 2 $ 3 24 $4 $ $ 2$ b. Double-declining-balance method Depreciation Accumulated Depreciation, Book Value, Year Expense End of Year End of Year 1 2 $ $
Chapter8: Depreciation And Sale Of Business Property
Section: Chapter Questions
Problem 6MCQ: Which of the following is not true about the MACRS depreciation system: A salvage value must be...
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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:Depreciation by Two Methods; Sale of Fixed Asset
New lithographic equipment, acquired at a cost of $593,750 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated
residual value of $51,100. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis
of the data presented to the manager, the double-declining-balance method was selected.
In the first week of the fifth year, on March 4, the equipment was sold for $87,000.
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
Depreciation
Accumulated Depreciation,
Book Value,
Year
Expense
End of Year
End of Year
1
$
3
2$
$
4
$4
$4
5
b. Double-declining-balance method
Depreciation
Accumulated Depreciation,
Book Value,
Year
Expense
End of Year
End of Year
1
$
2
$
$4
%24
Transcribed Image Text:Depreciation
Accumulated Depreciation,
Book Value,
Year
Expense
End of Year
End of Year
1
$
$
2$
2$
$
4
$
$4
$4
2. Journalize the entry to record the sale, assuming double-declining balance method is used. If an amount box does not require an entry, leave it blank.
3. Journalize the entry to record the sale in (2), assuming that the equipment was sold for $74,600 instead of $87,000. If an amount box does not require an entry,
leave it blank.
3.
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I don't know how I would come up with all the other answers? It only lets me know the asset minus the residual value is the answer I don't know how to get the other answers.
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