Question

please explain to me the calculations and where i went wrong... thank you

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 $46,08o. a. What was the depreciation for the first year? Round your answer to the nearest cent. 67,806.2 x 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 $107,811. Round your answer to the nearest cent and enter as a positive amount. $ 434,638. x Loss v Feedback V Check My Work Book value is the asset cost minus accumulated depreciation. In the first year, the balance in the accumulated depreciation account is zero. Compare the book value to the sale price. If the book value is more than the sale price, the equipment was sold for a loss. If the book value is less than the sale price, the equipment was sold for a gain. 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. Cash v. 107,811 Accumulated Depreciation-Equipment v 542,449.6 X Loss on Sale of Equipment 434.638.6 X Equipment v 662,500 Feedback V Check My Work Be sure to record the selling price of the fixed asset. If the company no longer has the fixed asset what account(s) would need to be eliminated? Was there a gain or a loss on the sale? Feedback V Check My Work Partially correct

Answer 1

a.

Depreciation as per straight line method = Cost of equipment - Residual value / useful life

Depreciation as per straight line method = $662,500 - 46,080 / 9 = $68,491 per year

Depreciation for first year = $68,491

b.

Accumulated depreciation = Total depreciation for 8 years

Accumulated depreciation at the end of eight year = $68,491 * 8 = $547,928

Book value of equipment at the end of eight year = $662,500 - 547,928 = $114,572

Gain (loss) on sale of equipment at the end of eight year = Sale value - Book value of equipment at the end of eight year

Gain (loss) on sale of equipment at the end of eight year = $107,811 - 114,572 = $(6,761) Loss

c.

Cash	$107,811
Accumulated depreciation - Equipment	547,928
Loss on sale of equipment	6,761
Equipment		$662,500