Equipment Was Acquired at the Beginning of the Year at a Cost

question 208

Essay

Equipment was acquired at the beginning of the year at a cost of $75,000. The equipment was depreciated using the straight-line method based on an estimated useful life of six years and an estimated residual value of $7,500.
(a)What was the depreciation expense for the first year?
(b)Assuming the equipment was sold at the end of the second year for $59,000, determine the gain or loss on sale of the equipment.
(c)Journalize the entry to record the sale.

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Definitions:

Carbohydrates

Organic compounds composed of carbon, hydrogen, and oxygen, typically found in foods and used as energy sources.

Phospholipids

A class of lipids that are a major component of all cell membranes, as they can form lipid bilayers.

Bilayer

Often refers to the lipid bilayer, a thin polar membrane made of two layers of lipid molecules, forming the basic structure of cell membranes.

Permeable Barrier

A structure or material that allows the passage of particles, such as liquids or gases, through itself while blocking others, based on size, shape, or other properties.