Equipment was acquired at the beginning of the year at a cost of $38,500. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of five years and an estimated residual value of $750.
a. What was the depreciation for the first
year?
$
b. Assuming the equipment was sold at the end
of year 3 for $8,730, determine the gain or loss on the sale of the
equipment.
$
c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.
Double decline rate = 100/5*2 = 40%
a) Depreciation expense = 38500*40% = 15400
b) Gain (loss) = Sale value-Book value = 8730-(38500*60%*60%*60%) = 414
c) Journal entry
Cash | 8730 | ||
Accumulated depreciation-equipment | 30184 | ||
Gain on sale of equipment | 414 | ||
Equipment | 38500 |
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