Depreciation by two methods; sale of fixed asset New lithographic equipment, acquired at...
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Accounting
Depreciation by two methods; sale of fixed asset
New lithographic equipment, acquired at a cost of $800,000 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $90,000. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year.
In the first week of the fifth year, on March 4, the equipment was sold for $135,000.
Required:
1.
Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each 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.
2.
Journalize the entry to record the sale assuming the manager chose the double-declining-balance method.
3.
Journalize the entry to record the sale in (2), assuming that the equipment was sold for $88,750 instead of $135,000. Refer to the Chart of Accounts for exact wording of account titles.
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