Sale of Equipment Equipment was acquired at the beginning of the year at a cost

Question

Sale of Equipment Equipment was acquired at the beginning of the year at a cost of $41,250. The equlpment was depreclated using the double-dedining-balance method based on an estimate useful life of ten years and an estimated residual value of $800. a. What was the depreciation for the first year? b. Assuming the equipment was sold at the end of year 2 for $9,530, determine the gain or loss on the sele of the equipment. c. Journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

Explanation / Answer

a) Straight line dep rate = 100/10 = 10%

double decline rate = 10*2 = 20%

First year dep = 41250*20% = 8250

b) Gain or (loss) on sale of equipment = Sale value-book value at the end of 2 year

                                                             = 9530-(41250*80%*80%)

loss on sale of equipment = (16870)

c) Journal entry :

Date accounts & explanation debit credit Accumlated depreciation 14850 Cash 9530 Loss on sale of equipment 16870     Equipment 41250 (To record sale of equipment)

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.