Sale of Equipment

Equipment was acquired at the beginning of the year at a cost of $29,500. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of ten years and an estimated residual value of $570.

a. What was the depreciation for the first year?
$

b. Assuming the equipment was sold at the end of year 2 for $6,820, determine the gain or loss on the sale of the equipment.
$

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

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.

Equipment was acquired at the beginning of the year at a cost of $75,720. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,920.

Required:

Equipment was acquired at the beginning of the year at a cost of $79,560. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,800.

a. What was the depreciation expense for the first year?
$

b. Assuming the equipment was sold at the end of the second year for $60,100, determine the gain or loss on sale of the equipment.
$   

c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank or enter "0".

Computer equipment was acquired at the beginning of the year at a cost of $27,500 that has an estimated residual value of $1,700 and an estimated useful life of 5 years.

a. Determine the depreciable cost.
$

b. Determine the double-declining-balance rate.
%

c. Determine the double-declining-balance depreciation for the first year.
$

Equipment was acquired at the beginning of the year at a cost of $40,000. The equipment was depreciated using the double-declining-balance method based on an estimated useful life of ten years and an estimated residual value of $780. a. What was the depreciation for the first year?

b. Assuming the equipment was sold at the end of year 2 for $9,240, determine the gain or loss on the sale of the equipment. $fill in the blank

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

Equipment was acquired at the beginning of the year at a cost of $562,500. The equipment was depreciated using the straight-line method based on an estimated useful life of 9 years and an estimated residual value of $40,600. 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 $92,889. 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.

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.

1. Suppose you are confronted with the following accounting dilemmas. In each case, what decision would you make and what accounting principles are relevant to the resolution:

   1. An employee has been discharged and this month is being paid severance pay equal to two months’ salary. Should this severance pay be considered an expense of this month, or should it be split between the next two months?

   2. Certain items have been in inventory for more than a year; there is only a 30 percent probability that they will ever be sold or used. Should their value be removed from the total inventory value?

   3. A manufacturer of sophisticated analysis instruments ships a new model to an important customer; the customer agrees to try the new model for two months and then either return the instrument or pay full price for it. Should this shipment be counted as a sale this month? If not, should you account for a decrease in inventory value and, if so, how?

   4. The company president purchases 1,000 shares of stock from a former employee of the company. How should the company account for this transaction?

   5. The company provides a $1,000 travel advance to the sales manager, who is about to depart on a business trip to Japan. What entries, if any, would you make?

   6. A major customer with a $400,000 outstanding account receivable declares bankruptcy. What entries, if any, would you make?

   7. Your company purchases $500 of merchandise from a vendor who offers a 10% discount if your company pays the invoice within 15 days. In the past, your company has always taken such lucrative discounts for prompt payment. At what value should you record this inventory and the corresponding account payable?

   8. Your company pays $120 for telephone classified advertising for the coming year. Should you treat that as an advertising expense of the current period? If yes, why? If not, how might you account for it?

   9. Annual interest charges on your five-year loan are $1,200, payable at the end of each calendar quarter. Should you recognize any interest expense in February? If so, how?

   10. Your company owns a computer for which it paid $8,000 two years ago. The computer is still carried at that value in your fixed asset valuation. You now believe that the computer will be worthless in two more years. Should you adjust the value of the computer at this time? If so, how?