Question

Equipment was acquired at the beginning of the year at a cost of $537,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $42,090. a. What was the depreciation for the first year? Round your answer to the nearest cent. 5,504,560 b. Using the rounded amount from Part a in your computation, determine the gain(loss) on the sale of the equipment, assuming it was sold at the end of year eight for $90,111. Round your answer to the nearest cent and enter as a positive amount 702,420 Loss C. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent. 110 1110 antin dance

Answer 1

a.

Cost – Residual Value Depreciation = Usefullife

$Depreciation = \frac{537,500 - 42,090}{9} = 55,045.56$

b.

Cost	537500
Less: Accumulated Depreciation (55045.56*8)	440364.48
Book Value	97135.52
Less: Sale Price	90111
Profit	7024.52

c. Entry -

Cash/Bank	90111
Accumulated Depreciation	440364.48
Profit		7024.52
Equipment		537500