Homework Answers
Part 1
Cost of asset = $30,000
Residual value = $4,000
Useful life = 5 year
Annual depreciation = (Cost of asset - Residual value)/Useful life
= (30,000 - 4,000)/5
= 26,000/5
= $5,200
Book value of asset on Dec 31, 2019 = Cost of assets - Accumulated depreciation
= 30,000 - 5,200
= $24,800
Sale price of equipment = $21,000
Loss on sale = Book value of asset on Dec 31, 2019 - Sale price of equipment
= 24,800 - 21,000
= $3,800
Correct option is (A)
Part 2
Cost of van = $840,000
Residual value = $104,000
Useful life = 5 year
Annual depreciation = (Cost of van - Residual value)/Useful life
= (840,000 - 104,000)/5
= 736,000/5
= $147,200
Book value of van at the end of 2019 = Cost of van - Annual depreciation
= 840,000 - 147,000
= $692,800
Correct option is (C)
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