What was the gain or loss on the sale

Reference no: EM13937789

Calculate depreciation under alternative methods and account for disposal of an asset.

A&W Root Beer Company bought new brewery equipment on January 1, 2008, for $64,000. The company expects the equipment to have a useful life of 8 years and a salvage value of $8,000. The company's fiscal year ends on December 31.

Required

a. Calculate the depreciation expense for the fiscal years 2008 and 2009 using each of the following methods:

1. Straight-line method

2. Double-declining balance method

b. Assume that the company decided to use the double-declining balance method and that the brewery equipment was sold at the end of December 2009, for $42,000. What was the gain or loss on the sale? On which financial statement would the gain or loss appear? What information does this accounting calculation provide for future decisions?

Reference no: EM13937789

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