Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $400,200, h
ID: 2531406 • Letter: D
Question
Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $400,200, has an estimated useful life of 10 years and an estimated residual value of $52,200. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Depreciation Expense Year Year 1 Year 2 Year 3 b. What was the book value of the equipment on January 1 of Year 4? C. Assuming that the equipment was sold on January 3 of Year 4 for $281,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. d. Assuming that the equipment had been sold on January 3 of Year 4 for $301,700 instead of $281,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.Explanation / Answer
SOLUTION
(A) Depreciation expense = (Cost - Salvage value) / Estimated useful life
= ($400,200 - $52,200) / 10
= $348,000 / 10 = $34,800
(B) Depreciation for 3 years = $34,800 * 3 = $104,400
Book value = Cost - Depreciation
= $400,200 - $104,400 = $295,800
(C)
(D)
Year Depreciation expense ($) 1 34,800 2 34,800 3 34,800