The balance sheets of HiROE Inc. showed the following at December 31, 2020 and 2019:

Required:

a. If there have not been any purchases, sales, or other transactions affecting this equipment account since the equipment was first acquired, what is the amount of the depreciation expense for 2020?b. Assume the same facts as in part a, and assume that the estimated useful life of the equipment to HiROE, Inc., is eight years and that there is no estimated salvage value. Determine:

1. What the original cost of the equipment was.

2. What depreciation method is apparently being used. Explain your answer.

3. When the equipment was acquired.

c. Assume that this equipment account represents the cost of five identical machines. Calculate the gain or loss on the sale of one of the machines on January 2, 2021, for $60,000. Use the horizontal model (or write the journal entry) to show the effect of the sale of the machine.

Transcribed Image Text:

December 31, 2020 December 31, 2019 Equipment, less accumulated depreciation of $212,625 at December 31, 2020, and $151,875 at December 31, 2019. $273,375 $334,125