Reference no: EM132722166

An equipment was bought at a price of $1,800,000 with a salvage value of $400,000 at the end of its life of five years.The depreciation was calculated using the diminishing balance method.

Required.

Problem 1: Determine the annual rate of depreciation.

Problem 2: Calculate depreciation, accumulated depreciation, and the book value for the 5 years.

Problem 3: Assume that at the end of the third year the equipment was sold at the price of $750,000.Show in the general journal the record of sale and an entry recognizing the expense of the machine sold.

Problem 4: Explain whether there is a gain or loss of the machine sold.

Problem 5: Show how the equipment is recorded in the balance sheet at the end of the year.

Problem 6: Assume that the depreciation is calculated using the sum of years digit method, Calculate the carrying amount for year two.