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Question
Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of 8 years and an estimated residual value of $45,000.
a. Compute the annual amount of depreciation for the first 3 years, assuming the straight-line method of depreciation is used.
b. Determine the book value of the equipment on January 1, Year 4.
c. Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry for the sale.
d. Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry for the sale.
Answer
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