1.

A company purchased equipment for $60,000 on January 1 of its first year. The equipments original estimated useful life is 8 years and its estimated salvage value is $12,000. The company uses the straight-line method of depreciation. On December 31 of its fourth year, before year-end adjusting entries have been recorded, the company decides to extend the estimated useful life 3 years giving it a total life of 11 years. The company did not change the salvage value and continues to use the straight-line method. How much depreciation expense should be recorded for the fourth year?

Group of answer choices

a. $6,750

b. $3,750

c. $6,000

d. $5,333

e. $4,667

2.

In the current year, a company sold equipment for $20,000. The original cost was $70,000, the estimated salvage value was $4,000, and the expected useful life was 6 years. The equipment was fully depreciated. How much is the gain or loss on the sale?

Group of answer choices

a. $14,000 loss

b. $16,000 gain

c. $50,000 loss

d. $5,400 gain

e. $7,000 gain