Depreciation by Two Methods; Sale of Fixed Asset
New lithographic equipment, acquired at a cost of $625,000 onMarch 1 of Year 1 (beginning of the fiscal year), has an estimateduseful life of five years and an estimated residual value of$53,700. The manager requested information regarding the effect ofalternative methods on the amount of depreciation expense eachyear.
On March 4 of Year 5, the equipment was sold for $91,500.
Required:
1. Determine the annual depreciation expensefor each of the estimated five years of use, the accumulateddepreciation at the end of each year, and the book value of theequipment at the end of each year by the following methods:
a. Straight-line method
| Year | Depreciation
Expense | Accumulated Depreciation,
End of Year | Book Value,
End of Year |
| 1 | $ | $ | $ |
| 2 | $ | $ | $ |
| 3 | $ | $ | $ |
| 4 | $ | $ | $ |
| 5 | $ | $ | $ |
b. Double-declining-balance method
| Year | Depreciation
Expense | Accumulated Depreciation,
End of Year | Book Value,
End of Year |
| 1 | $ | $ | $ |
| 2 | $ | $ | $ |
| 3 | $ | $ | $ |
| 4 | $ | $ | $ |
| 5 | $ | $ | $ |
2. Journalize the entry to record the saleassuming that the manager chose the double declining-balancemethod. If an amount box does not require an entry, leave itblank.
3. Journalize the entry to record the sale in(2) assuming that the equipment was sold for $78,600 instead of$91,500. If an amount box does not require an entry, leave itblank.
