New lithographic equipment, acquired at a cost of $906,250 on March 1 of Year 1 (Beginning of the Fiscal year), has an estimated useful life of five years and an estimated residual value of $77,900. The manager requests information regarding the effect of alternative methods on the amount of depreciation expense each year.

On March 4 of Year 5, the equipment was sold for $132,700.

Required:

1. Determine the annual depreciation expense for each of the estimated five years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by the following methods:

a. Straight-line method.

Year	Depreciation Expense	Accumulated Depreciation, End of Year
1	$ _____	$_____
2	$ _____	$_____
3	$ _____	$_____
4	$ _____	$_____
5	$ _____	$_____

b. Double-declining method.

Year	Depreciation Expense	Accumulated Depreciation, End of Year
1	$ _____	$_____
2	$ _____	$_____
3	$ _____	$_____
4	$ _____	$_____
5	$ _____	$_____

2. Journalize the entry to record the sale assuming that the manager chose the double-declining balance method.

3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $113,700 instead of $132,700.

Answer rating: 100% (QA)

Computation of straight line depreciation Cost 90625000 Less Residual value 7790000 Depreciable valu... View the full answer