Instructions Equipment was acquired at the beginning of the year at a cost of $6
ID: 2538392 • Letter: I
Question
Instructions Equipment was acquired at the beginning of the year at a cost of $637,500. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of 9 years and an estimated residual value of $43,195 A. What was the depreciation for the first year? Round your intermediate calculations to 4 decimal places. Round the depreciation for the year to the nearest whole dollar. B. Assuming the equipment was sold at the end of the second year for $631,697, determine the gain or loss on the sale of the equipment C. Journalize the entry on Dec. 31 to record the sale. Refer to the Chart of Accounts for exact wording of account titles.Explanation / Answer
a Depreciation rate = 1/9*2= 22.2222% Depreciation for first year = 637500*22.2222% = $141667 b Depreciation for second year =(637500-141667)*22.2222% = $110185 Gain on sale = 631967-(637500-141667-110185)= $246319 c Date Des Post ref Debit Credit Assets Liabilities Equity 31-Dec Cash 631967 631967 Accumuated depreciation-Equipment 251852 251852 Equipment 637500 -637500 Gain on sale of Equipment 246319 246319