1. Ermier Company purchased a machine at a cost of $80,000. The machine is expected to have a $5,000 salvage value at the end of its 5-year useful life.

Instructions:

Compute annual depreciation for the first and second years using the

(a) straight-line method.

(b) double-declining-balance method.

2. Brown Company purchased equipment in 2008 for $150,000 and estimated a $10,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2014, there was $98,000 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2015, the equipment was sold for $40.000.

Prepare all necessary journal entries related to the equipment in the books of Brown Company on March 31, 2015.

Answer rating: 100% (QA)

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