Equipment acquired on January 3, 20Y1, at a cost of $140,000, has an estimated useful life of
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Equipment acquired on January 3, 20Y1, at a cost of $140,000, has an estimated useful life of 5 years and an estimated residual value of $15,000.
a. What was the annual amount of depreciation for the years 20Y1, 20Y2, and 20Y3, using the straight-line method of depreciation?
b. What was the book value of the equipment on January 1, 20Y4?
c. Assuming that the equipment was sold on January 2, 20Y4, for $63,500, illustrate the effects on the accounts and financial statements of the sale.
d. Assuming that the equipment was sold on January 2, 20Y4, for $71,000 instead of $63,500, illustrate the effects on the accounts and financial statements of the sale.
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