Reference no: EM132687820

Equipment acquired on January 6 at a cost of $375,000 has an estimated useful life of 20 years and an estimated residual value of $25,000.

Problem a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation?

Year 1:
Year 2:
Year 3:

Problem b. What was the book value of the equipment on January 1 of Year 4?

Problem c. Assuming that the equipment was sold on January 3 of Year 4 for $300,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

Cash:
Accumulated Depreciation- Equipment
Loss on Sale of Equipment
Equipment

Problem d. Assuming that the equipment had been sold on January 3 of Year 4 for $325,000 instead of $300,000, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

Cash:
Accumulated Depreciation- Equipment
Equipment:
Gain on sale of Equipment