Equipment acquired on January 9, 20Y3, at a cost of $560,000, has an estimated useful life of 20 years, an estimated residual value of $40,000, and is depreciated by the straight-line method.
a. What was the book value of the equipment at the end of the fifth year, December 31, 20Y7?
b. Assuming that the equipment was sold on July 1, 20Y8, for $400,000, illustrate the effects on the accounts and financial statements of
(1) Depreciation for the six months until the sale date and
(2) The sale of the equipment.