Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000. Required: (a)  What is the annual amount of depreciation for the first three years, assuming the straight-line method of depreciation is used? (b)  What is the book value of the equipment on January 1, Year 4? (c)  Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles. (d)  Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 5MC: A machine with a 4-year estimated useful life and an estimated 15% residual value was acquired on...
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Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000.
Required:
(a)  What is the annual amount of depreciation for the first three years, assuming the straight-line method of depreciation is used?
(b)  What is the book value of the equipment on January 1, Year 4?
(c)  Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.
(d)  Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry to record the sale. Refer to the Chart of Accounts for exact wording of account titles.
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