HELP!!! Depreciation Method: straight line Purchase Date: 8/1/2005 Cost: $20,000.00 Estimated Life: 5 Sales Price: $1,000.00...
HELP!!!
Depreciation Method: straight line
Purchase Date: 8/1/2005
Cost: $20,000.00
Estimated Life: 5
Sales Price: $1,000.00
Date Sold: 12/31/2010
a. What is the depreciation expense for yr 3 using the straight‐line method?
b. What is the net book value of the equipment at the end of year 2?
c. Calculate gain/loss on sale of equipment.
d. What is the account balance in accumulated depreciation on 12/31/2010?
Homework Answers
a.
Annual depreciation expense = Cost of equipment / Useful life
= 20,000/5
= $4,000
Hence, Depreciation expense for year 3 = $4,000
b.
Depreciation expense for 2005 = 4,000 x 5/12
= $1,667
Accumulated depreciation at the end of year 2 = 1,667+4,000
= $5,667
Book value of equipment at the end of year 2 = 20,000-5,667
= $14,333
d.
Accumulated depreciation on 12/31/2010 = $1,667 for 2005 + $4,000 for 2006 + $4,000 for 2007 + $4,000 for 2008 + $4,000 for 2009 + $2,333 for 2010
= $20,000
c.
Book value of equipment on 12/31/2010 = Cost price - Accumulated depreciation on 12/31/2010
= 20,000-20,000
= $0
Gain on sale of equipment = Sale price - Book value of equipment on 12/31/2010
= 1,000-0
= $1,000
Kindly comment if you need further assistance. Thanks‼!
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