Equipment was acquired at the beginning of the year at a cost of $465,000. the equipment was depreciated using the straight-line method based on an estimated useful life of 15 years and an estimated residual value of $45,000. required:

a. what was the depreciation for the first year?

b. assuming the equipment was sold at the end of the eighth year for $235,000, determine the gain or loss on the sale of the equipment.

c. journalize the entry to record the sale. refer to the chart of accounts for exact wording of account titles.

Question

Mathematics

Ignacio Curtis

25 February, 00:52

Equipment was acquired at the beginning of the year at a cost of $465,000. the equipment was depreciated using the straight-line method based on an estimated useful life of 15 years and an estimated residual value of $45,000. required:

a. what was the depreciation for the first year?

b. assuming the equipment was sold at the end of the eighth year for $235,000, determine the gain or loss on the sale of the equipment.

c. journalize the entry to record the sale. refer to the chart of accounts for exact wording of account titles.

+5

Answers (1)

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Claudia · Answer 1

A. Using the straight-line depreciation method, we can calculate for the depreciation using the formula:

d = (P - S) / n

Where,

P = present value

S = salvage value

n = number of life years

Substituting the given values:

d = ($465,000 - $45,000) / 15

d = $28,000

The depreciation for the first year was $28,000 and the book value is $437,000.

B. Calculating for the book value at the end of eight year:

BV (8) = $465,000 - 8 * $28,000

BV (8) = $241,000

Since the equipment was sold at only $235,000 therefore there was a loss of $6,000.

C. Chart of accounts is needed.