Sale of Equipment
Equipment was acquired at the beginning of the year at a cost of $575,000. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $42,260.
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 $96,328.
Round your answer to the nearest cent and enter as a positive
amount.
$ Loss
Feedback
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 | |||
Accumulated Depreciation-Equipment | |||
Loss on Sale of Equipment | |||
Equipment |
Answers
A |
Cost |
$ 575,000.00 |
B |
Residual Value |
$ 42,260.00 |
C=A - B |
Depreciable base |
$ 532,740.00 |
D |
Life [in years] |
9 |
E=C/D |
Annual SLM depreciation |
$ 59,193.33 |
Sold for $ 96,238
Sale Value is LESS than Book Value =
LOSS
LOSS = $ 101,453.36 – 96328
=$ 5,125.36
Cash |
$ 96328 |
||
Accumulated Depreciation-Equipment |
$ 473546.64 |
||
Loss on Sale of Equipment |
$ 5125.36 |
||
Equipment |
$ 575,000 |
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