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Depreciation by two methods; sale of fixed asset New tire retreading equipment, acquired at a cost of $110,000 on September 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of four years and an estimated residual value of $7,500. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected. On September 6 of Year 4, the equipment was sold for $18,000. Instructions 1. Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of earn year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method. The following columnar headings are suggested for earn schedule: Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 2. Journalize the entry to record the sale. 3. Journalize the entry to record the sale, assuming that the equipment sold for $10,500 instead of $l8,000.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 10, Problem 10.4BPR
Textbook Problem

Depreciation by two methods; sale of fixed asset

New tire retreading equipment, acquired at a cost of $110,000 on September 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of four years and an estimated residual value of $7,500. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected.

On September 6 of Year 4, the equipment was sold for $18,000.

Instructions

1.    Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of earn year, and the book value of the equipment at the end of each year by (a) the straight-line method and (b) the double-declining-balance method. The following columnar headings are suggested for earn schedule:

Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year

2.    Journalize the entry to record the sale.

3.    Journalize the entry to record the sale, assuming that the equipment sold for $10,500 instead of $l8,000.

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Chapter 10 Solutions

Accounting
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