Equipment Acquired on January 2, Year 1, at a Cost

question 171

Essay

Equipment acquired on January 2, Year 1, at a cost of $525,000 has an estimated useful life of eight years and an estimated residual value of $45,000.
Required
(a)What is the annual amount of depreciation for the first three years, assuming the straight-line method of depreciation is used?
(b)What is the book value of the equipment on January 1, Year 4?
(c)Assuming that the equipment is sold on January 2, Year 4, for $326,000, journalize the entry to record the sale.
(d)Assuming that the equipment is sold on January 2, Year 4, for $394,000, journalize the entry to record the sale.

---

Definitions:

Inhalant Abuse

The intentional inhaling of chemical vapors or gases to achieve a psychoactive, or mind-altering, effect.

Inhalant-Induced Anxiety Disorder

Anxiety or panic attacks triggered by the abuse of inhalable substances, leading to significant distress or impairment.

Withdrawal

The process or symptoms that occur when stopping or reducing the intake of addictive substances.

Bipolar Disorder

A mental health condition characterized by extreme mood swings including emotional highs (mania or hypomania) and lows (depression).