Solution a:
Depreciation rate - SLM = 1/16 = 6.25%
Depreciation rate - DDB =6.25%*2 = 12.50%
Depreciation for the first year = $600,000 * 12.50% = $75,000
Solution b:
Book value of equipment for 2nd year = Beginning book value - Depreciation for 2nd year
= ($600,000 - $75,000) - ($525,000*12.50%) = $459,375
Gain or loss on sale of equipment = Sales value - Book value = $480,000 - $459,375 = $20,625
solution c:
Journal Entries | ||||
Event | Date | Particulars | Debit | Credit |
1 | 31-Dec | Cash Dr | $480,000.00 | |
Accumulated depreciation - Equipment Dr | $140,625.00 | |||
To equipment | $600,000.00 | |||
To Gain on sale of equipment | $20,625.00 | |||
(To record sale of equipment) |
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