Equipment was acquired at the beginning of the year at a cost of $76,200. The eq
ID: 2579794 • Letter: E
Question
Equipment was acquired at the beginning of the year at a cost of $76,200. The equipment was depreciated using the straight-line method based on an estimated useful life of six year and an estimated residual value of $7,500. What is the depreciation expense for the fist year. Assuming the equipment was sold at the end of the year did $57,600 determine the gain or loss on the sale of the equipment. Equipment was acquired at the beginning of the year at a cost of $76,200. The equipment was depreciated using the straight-line method based on an estimated useful life of six year and an estimated residual value of $7,500. What is the depreciation expense for the fist year. Assuming the equipment was sold at the end of the year did $57,600 determine the gain or loss on the sale of the equipment.Explanation / Answer
1. Depriciation =(cost -residual value)/useful life
Depreciation expense for first year=($76,200-$7500)/6
=$11,450
2. Adjusted at the end of first year =$76,200-$11450
=$64,750
Gain(loss) on sale of equipment =sales price- adjusted cost at time of sale
=$57,600-64,750
=(7,150)
Loss of $7,150
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