Question

Equipment was acquired at the beginning of the year at a cost of $35,000. The equipment was depreciated using the A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.double-declining-balance method based on an estimated useful life of ten years and an estimated The estimated value of a fixed asset at the end of its useful life.residual value of $680.

a. What was the The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.depreciation for the first year?
$

b. Assuming the equipment was sold at the end of year 2 for $8,090, determine the gain or loss on the sale of the equipment.
$ Loss

• Gain
• Loss

Feedback

Book value is the asset cost minus accumulated depreciation. In the first year, the balance in the accumulated depreciation account is zero.

Compare the book value to the sale price. If the book value is more than the sale price, the equipment was sold for a loss. If the book value is less than the sale price, the equipment was sold for a gain.

Learning Objective 3.

c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

	Cash Accounts Payable Accounts Receivable Cash Depreciation Expense Equipment Gain on Sale of Equipment
	Accumulated Depreciation-Equipment Accounts Payable Accounts Receivable Accumulated Depreciation-Equipment Depreciation Expense Equipment Gain on Sale of Equipment
	Loss on Sale of Equipment Accounts Payable Accounts Receivable Depreciation Payable Depreciation Expense Loss on Sale of Equipment
	Equipment Accounts Payable Accounts Receivable Accumulated Depreciation-Equipment Depreciation Expense Equipment Loss on Sale of Equipment

Answer 1