Reference no: EM132600976

On 01/07/2010, "ABC" Company purchased equipment for $1,200,000 On that date, the company paid 40% of the amount and promised to pay the balance after 3 months. The company estimated that the equipment salvage value and useful life will be equal to $300,000 and 12 years, respectively.

During the year 2014, the company changed the estimates as follows: The equipment new salvage value will be equal to $140,000 and the useful life will be extended by 2 years.

Based on the above given information, answer the following questions, assuming the company is using the straight line method for depreciation:

Question 1. What is the amount of depreciation expense that must be presented on the company's income statement for the year 2010?

Question 2. What is the amount of depreciation expense that must be presented on the company's income statement for the year 2011?

Question 3. What is the book value of the equipment as on 31/12/2011?

Question 4. What is the amount of depreciation expense that must be presented on the company's income statement for the year 2014?

Question 5. What is the book value of the equipment as on 31/12/2014?

If the company sold the equipment on 1/7/2015 for $500,000 , answer the below questions:

Question 1. What is the amount of depreciation expense that must be presented on the company's income statement for the year 2015?

Question 2. What is the amount of amount of gains/ losses that must be presented on the company's income statement for the year 2015 _______(Loss/Gain) with an amount of_________