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.

Understand and apply simple interest formulas to calculate the future value of an investment.

Understand and apply compound interest formulas to calculate the future value of an investment.

Perform arithmetic operations with fractions and decimals.

Evaluate expressions using the order of operations, including exponentiation.

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Definitions:

Delayed Gratification

The ability to resist the temptation for an immediate reward and wait for a later reward.

Advanced Math

A field of study focusing on mathematical concepts and techniques that are more complex and abstract than basic arithmetic or algebra.

Insulin

A hormone produced by the pancreas that regulates blood sugar levels by facilitating the uptake of glucose into tissues, essential for energy production.

Glucose

An elementary sugar essential for energy in living entities and a foundational element of many carbohydrate structures.