Equipment acquired on January 9, 20Y3, at a cost of $633,000, has an estimated useful life of 16 years, an estimated residual value of $113,940, and is depreciated by the straight-line method. a. What was the book value of the equipment at the end of the fifth year, December 31, 20Y7? Round your interim calculations and final answer to the nearest dollar. $ For decreases in accounts or outflows of cash, enter your answers as negative numbers. Round annual depreciation to the nearest dollar and use this amount in your follow-on calculations. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. b1. Assuming that the equipment was sold on July 1, 20Y8, for $189,900, illustrate the effects on the accounts and financial statement of depreciation for the six months until the sale date. b2. Assuming that the equipment was sold on July 1, 20Y8, for $189,900, illustrate the effects on the accounts and financial statement of the sale of the equipment.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Equipment acquired on January 9, 20Y3, at a cost of $633,000, has an estimated useful life of 16 years, an estimated residual value of $113,940, and is
a. What was the book value of the equipment at the end of the fifth year, December 31, 20Y7? Round your interim calculations and final answer to the nearest dollar.
$
For decreases in accounts or outflows of cash, enter your answers as negative numbers. Round annual depreciation to the nearest dollar and use this amount in your follow-on calculations. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank.
b1. Assuming that the equipment was sold on July 1, 20Y8, for $189,900, illustrate the effects on the accounts and financial statement of depreciation for the six months until the sale date.
b2. Assuming that the equipment was sold on July 1, 20Y8, for $189,900, illustrate the effects on the accounts and financial statement of the sale of the equipment.
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