Question
In: Accounting
Sale of Equipment Equipment was acquired at the beginning of the year at a cost of...
Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $575,000. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $44,745. a. What was the depreciation for the first year? Round your answer to the nearest cent. $ b. Using the rounded amount from Part a in your computation, determine the gain(loss) on the sale of the equipment, assuming it was sold at the end of year eight for $98,037. Round your answer to the nearest cent and enter as a positive amount. $ c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Round your answers to the nearest cent.
Solutions
Expert Solution
- Requirement [a]
|
A |
Cost |
$ 575,000.00 |
|
B |
Residual Value |
$ 44,745.00 |
|
C=A - B |
Depreciable base |
$ 530,255.00 |
|
D |
Life [in years] |
9 |
|
E=C/D |
Annual SLM depreciation |
$ 58,917.22 |
Depreciation for the first year = $ 58,917.22
- Requirement [b]
Answer: Loss on sale = $ 5,625.24
|
A |
Cost of equipment |
$575,000.00 |
|
B |
Annual Depreciation |
$58,917.22 |
|
C = A x 8 years |
Accumulated Depreciation at the end of 8th year |
$471,337.76 |
|
D = A - C |
Book Value at the time of sale |
$103,662.24 |
|
E |
Sold for |
$98,037.00 |
|
F = E - D |
Loss on Sale |
$5,625.24 |
- Requirement [c]
|
Date |
Accounts title |
Debit |
Credit |
|
31 Dec Year 8 |
Cash |
$98,037.00 |
|
|
Accumulated Depreciation Equipment |
$471,337.76 |
||
|
Loss on sale of equipment |
$5,625.24 |
||
|
Equipment |
575,000.00 |
||
|
(Equipment sold) |
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