Question

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $375,000 has an estimated useful life of 20 years and an estimated residual value of $25,000. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Year Depreciation Expense Year! Year 2 Year 3 b. What was the book value of the equipment on January 1 of Year 42 Assuming that the equipment was sold on January 3 of Year 4 for $300,000, Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Jan. 3 d. Assuming that the equipment had been sold on January 3 of Year 4 for $325,000 instead of $300,000, Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. 10 more Check My Work uses remaining.

Answer 1

a
	Depreciation expense
Year 1	17500	=(375000-25000)/20
Year 2	17500	=(375000-25000)/20
Year 3	17500	=(375000-25000)/20
b
	Book value of Equipment	322500	=375000-(17500*3)
c
Jan. 3	Cash	300000
	Accumulated Depreciation-Equipment	52500
	Loss on disposal of Equipment	22500
	Equipment		375000
d
Jan. 3	Cash	325000
	Accumulated Depreciation-Equipment	52500
	Equipment		375000
	Gain on disposal of Equipment		2500