Equipment acquired on January 8 at a cost of $199,350 has an estimated useful life of 20 years, has an estimated residual value of $8,950, and is depreciated by the straight-line method. Question Content Area a. What was the book value of the equipment at December 31 the end of the fourth year? Book value is the initial cost of the fixed asset minus the accumulated depreciation. Question Content Area b. Assuming that the equipment was sold on April 1 of the fifth year for $153,470. 1. Journalize the entry to record depreciation for the 3 months until the sale date. If an amount box does not require an entry, leave it blank. Round your answers to the nearest whole dollar if required. Account Debit Credit Depreciation Expense-Equipment Accumulated Depreciation-Equipment The depreciation account of the fixed asset being sold or discarded needs to be updated to reflect the months of use in the year it is being discarded or sold. The straight-line method of depreciation calculates the amount of depreciation to be recognized each year. Question Content Area 2. Journalize the entry to record the sale of the equipment. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations. Account Debit Credit cash Accumulated Depreciation-Equipment Loss on Sale of Equipment Equipment

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter2: Asset And Liability Valuation And Income Recognition

Section: Chapter Questions

Problem 14PC

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Question Content Area

a. What was the book value of the equipment at December 31 the end of the fourth year?

Book value is the initial cost of the fixed asset minus the accumulated depreciation.

Question Content Area

b. Assuming that the equipment was sold on April 1 of the fifth year for $153,470.

1. Journalize the entry to record depreciation for the 3 months until the sale date. If an amount box does not require an entry, leave it blank. Round your answers to the nearest whole dollar if required.

Account	Debit	Credit
Depreciation Expense-Equipment
Accumulated Depreciation-Equipment

The depreciation account of the fixed asset being sold or discarded needs to be updated to reflect the months of use in the year it is being discarded or sold. The straight-line method of depreciation calculates the amount of depreciation to be recognized each year.

Question Content Area

2. Journalize the entry to record the sale of the equipment. If an amount box does not require an entry, leave it blank. Do not round intermediate calculations.