70.2K

Verified Solution

Link Copied!

Depreciation by Two Methods; Sale of Fixed Asset

New lithographic equipment, acquired at a cost of $906,250 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $77,900. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year.

On March 4 of Year 5, the equipment was sold for $132,700.

Required:

Question Content Area

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

Year	Depreciation Expense	Accumulated Depreciation, End of Year	Book Value, End of Year
1	$fill in the blank 6f8df6fa2fecfa1_1	$fill in the blank 6f8df6fa2fecfa1_2	$fill in the blank 6f8df6fa2fecfa1_3
2	$fill in the blank 6f8df6fa2fecfa1_4	$fill in the blank 6f8df6fa2fecfa1_5	$fill in the blank 6f8df6fa2fecfa1_6
3	$fill in the blank 6f8df6fa2fecfa1_7	$fill in the blank 6f8df6fa2fecfa1_8	$fill in the blank 6f8df6fa2fecfa1_9
4	$fill in the blank 6f8df6fa2fecfa1_10	$fill in the blank 6f8df6fa2fecfa1_11	$fill in the blank 6f8df6fa2fecfa1_12
5	$fill in the blank 6f8df6fa2fecfa1_13	$fill in the blank 6f8df6fa2fecfa1_14	$fill in the blank 6f8df6fa2fecfa1_15

b. Double-declining-balance method

Year	Depreciation Expense	Accumulated Depreciation, End of Year	Book Value, End of Year
1	$fill in the blank 6f8df6fa2fecfa1_16	$fill in the blank 6f8df6fa2fecfa1_17	$fill in the blank 6f8df6fa2fecfa1_18
2	$fill in the blank 6f8df6fa2fecfa1_19	$fill in the blank 6f8df6fa2fecfa1_20	$fill in the blank 6f8df6fa2fecfa1_21
3	$fill in the blank 6f8df6fa2fecfa1_22	$fill in the blank 6f8df6fa2fecfa1_23	$fill in the blank 6f8df6fa2fecfa1_24
4	$fill in the blank 6f8df6fa2fecfa1_25	$fill in the blank 6f8df6fa2fecfa1_26	$fill in the blank 6f8df6fa2fecfa1_27
5	$fill in the blank 6f8df6fa2fecfa1_28	$fill in the blank 6f8df6fa2fecfa1_29	$fill in the blank 6f8df6fa2fecfa1_30

Question Content Area

2. Journalize the entry to record the sale assuming that the manager chose the double-declining-balance method. If an amount box does not require an entry, leave it blank.

blank	CashDepreciation Expense-EquipmentEquipmentGain on Sale of EquipmentLoss on Sale of Equipment	- Select -	- Select -
	Accumulated Depreciation-EquipmentDepreciation Expense-EquipmentEquipmentGain on Sale of EquipmentLoss on Sale of Equipment	- Select -	- Select -
	Accumulated Depreciation-EquipmentCashDepreciation Expense-EquipmentEquipmentLoss on Sale of Equipment	- Select -	- Select -
	Accumulated Depreciation-EquipmentBuildingsDepreciation Expense-EquipmentGain on Sale of EquipmentLoss on Sale of Equipment	- Select -	- Select -

Question Content Area

3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $113,900 instead of $132,700. If an amount box does not require an entry, leave it blank.

blank	Accounts PayableCashDepreciation Expense-EquipmentEquipmentGain on Sale of Equipment	- Select -	- Select -
	Accounts ReceivableAccumulated Depreciation-EquipmentDepreciation Expense-EquipmentEquipmentGain on Sale of Equipment	- Select -	- Select -
	Accounts PayableDepreciation Expense-EquipmentEquipmentGain on Sale of EquipmentLoss on Sale of Equipment	- Select -	- Select -
	Accumulated Depreciation-EquipmentCashDepreciation Expense-EquipmentEquipmentGain on Sale of Equipment	- Select -	- Select -

Answer & Explanation Solved by verified expert

See Answer