1. Depreciation by Two Methods; Sale of Long-term or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in the normal business operations and that depreciate over time.Fixed Asset

New lithographic equipment, acquired at a cost of $781,250 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated The estimated value of a fixed asset at the end of its useful life.residual value of $67,200. The manager requested 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 $114,400.

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 The cost of a fixed asset minus accumulated depreciation on the asset.book value of the equipment at the end of each year by the following methods:

a. A method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.Straight-line method

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

b. A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life. Double-declining-balance method

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

Feedback

2. Journalize the entry to record the sale assuming that the manager chose the double declining-balance method. If an amount box does not require an entry, leave it blank.

	Cash Depreciation Expense-Equipment Equipment Gain on Sale of Equipment Loss on Sale of Equipment
	Accumulated Depreciation-Equipment Depreciation Expense-Equipment Equipment Gain on Sale of Equipment Loss on Sale of Equipment
	Accumulated Depreciation-Equipment Cash Depreciation Expense-Equipment Equipment Loss on Sale of Equipment
	Accumulated Depreciation-Equipment Buildings Depreciation Expense-Equipment Gain on Sale of Equipment Loss on Sale of Equipment

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3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $98,200 instead of $114,400. If an amount box does not require an entry, leave it blank.

	Accounts Payable Cash Depreciation Expense-Equipment Equipment Gain on Sale of Equipment
	Accounts Receivable Accumulated Depreciation-Equipment Depreciation Expense-Equipment Equipment Gain on Sale of Equipment
	Gain on Sale of Equipment Accounts Payable Depreciation Expense-Equipment Equipment Loss on Sale of Equipment
	Accumulated Depreciation-Equipment Cash Depreciation Expense-Equipment Equipment Gain on Sale of Equipment