Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $662,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $48,475. 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 $110,575. Round your answer to the nearest cent and enter as a positive amount. $ GAIN OR LOSS? c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent. WHICH ONE FOR EACH? Accounts Payable Accounts Receivable Cash Depreciation Expense Equipment Gain on Sale of Equipment Depletion Hidden Hollow Mining Co. acquired mineral rights for $55,000,000. The mineral deposit is estimated at 50,000,000 tons. During the current year, 10,500,000 tons were mined and sold. a. Determine the depletion rate. If required, round your answer to two decimal places. $ per ton b. Determine the amount of depletion expense for the current year. $ c. Journalize the adjusting entry on December 31 to recognize the depletion expense. accumulated depletion accumulated depreciation depletion expense depreciation expense cash mineral deposit Dec. 31
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 $662,500. 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 $110,575.
Round your answer to the nearest cent and enter as a positive amount.
$
GAIN OR LOSS?
c.
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WHICH ONE FOR EACH?
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Depletion
Hidden Hollow Mining Co. acquired mineral rights for $55,000,000. The mineral deposit is estimated at 50,000,000 tons. During the current year, 10,500,000 tons were mined and sold.
a. Determine the depletion rate. If required, round your answer to two decimal places.
$ per ton
b. Determine the amount of depletion expense for the current year.
$
c. Journalize the
accumulated depletion
depletion expense
depreciation expense
cash
mineral deposit
| Dec. 31 | |||
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