Reference no: EM132650629
Express Co. purchased equipment on March 1, 2019, for $95,000 on account. The equipment had an estimated useful life of five years, with a residual value of $5,000. The equipment is disposed of on February 1, 2022. Express Co. uses the diminishing-balance method of depreciation with a 20% rate and calculates depreciation for partial periods to the nearest month. The company has an August 31 year end.
Question 1: Record the acquisition of the equipment on March 1, 2019.
Question 2: Record depreciation at August 31, 2019, 2020, and 2021.
Question 3: Record the disposal on February 1, 2022, under the following assumptions:
a) It was scrapped with no residual value.
b) It was sold for $55,000.
c) It was sold for $45,000.
d) It was traded for new equipment with a list price of $97,000.
Question 4: Express was given a trade-in allowance of $52,000 on the old equipment and paid the balance in cash. Express determined the old equipment's fair value to be $47,000 at the date of the exchange.
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