Answer to 1.
a. straight Line Method | |||
Year | Depreciation Expense | Accumulated depreciation, End of Year | Book Value, End of Year |
1 | 154,230 | 154,230 | 689,520 |
2 | 154,230 | 308,460 | 535,290 |
3 | 154,230 | 462,690 | 381,060 |
4 | 154,230 | 616,920 | 226,830 |
5 | 154,230 | 771,150 | 72,600 |
working:
Cost | 843,750 |
Less: residual Value | 72,600 |
Depreciable value | 771,150 |
Life | 5 Years |
Annual Depreciation | 154,230 |
b. Double decline balance Method - 40% | |||
Year | Depreciation Expense | Accumulated depreciation, End of Year | Book Value, End of Year |
1 | 337,500 | 337,500 | 506,250 |
2 | 202,500 | 540,000 | 303,750 |
3 | 121,500 | 661,500 | 182,250 |
4 | 72,900 | 734,400 | 109,350 |
5 | 43,740 | 778,140 | 65,610 |
Working: In double decline method depreciation rate will be double of straight line. It means assets of life 5 normal straight line depreciation is 20% so double decline is 40% on Reducing balance.
Answer to 2.
Debit | Credit | |
Cash | 123,600 | |
Accumulated Depreciation | 734,400 | |
Profit on sale of equipment | 14,250 | |
Equipment | 843,750 |
Answer to 3.
Debit | Credit | |
Cash | 106,100 | |
Accumulated Depreciation | 734,400 | |
Loss on sale of equipment | 3,250 | |
Equipment | 843,750 |
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