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Firefox File Edit View History Bookmarks Tools Window Help 4526 D. Wed 11:42 AM E CengageNOWv2 Online teaching and learning resource from Cengage Learning v2.cengagenow.com/ilrn/takeAssignment takeAssignmentMain doinvoker=&takeAssignmentSessionLocator; assignment take&inprogress-false; Chapter 9 Assignment eBook Calculator Depreciation by Two Methods; Sale of Fixed Asset New lithographic equipment, acquired at a cost of $937,500 on March 1 at the beginning of a fiscal year, has an estimated useful life of five years and an estimated residual value of $80,600. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double-declining-balance method was selected In the first week of the fifth year, on March 4, the equipment was sold for $137,300. Required: 1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods: a. Straight-line method Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year Year b. Double-declining-balance method Depreciation Accumulated Depreciation, Book Value, Check My Work Previous

Explanation / Answer

Cost of the machine 937,500

Residual value 80,600 and estimated life 5 years

Under straight line method depreciation per year will be

= (937,500-80,600)/5

= 171,380

Carrying value at the beginning of 5th year will be

= 937,500- (171,380 * 4)

= 251,980

Equipment was sold for 137,300

Loss on sale = 251,980 - 137,300 = 114,680 loss

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