6 Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $144,900 has an estimated useful life of 7 years and an estimated residual value of $18,900 a What was the annual amount of depreciation for Years 1 3 using the straight line method of depreciation Year Depreciation Expense Year 1 $fill in the blank 8af63d05c072fff 1 Year 2 $fill in the blank 8af63d05c072fff 2 Year 3 $fill in the blank 8af63d05c072fff 3 b What was the book value of the equipment on January 1 of Year 4 $fill in the blank 8af63d05c072fff 4 Feedback Asset cost minus residual value equals depreciable cost Asset cost minus accumulated depreciation equals book value The Accumulated Depreciation account is a permanent account and therefore the balance in the account grows each year of the asset's life c Assuming that the equipment was sold on January 3 of Year 4 for $86,400, journalize the entry to record the sale If an amount box does not require an entry, leave it blank Cash fill in the blank 9cbf4f005fa5faa 2 fill in the blank 9cbf4f005fa5faa 3 Accumulated Depreciation Equipment fill in the blank 9cbf4f005fa5faa 5 fill in the blank 9cbf4f005fa5faa 6 Loss on Sale of Equipment fill in the blank 9cbf4f005fa5faa 8 fill in the blank 9cbf4f005fa5faa 9 Equipment fill in the blank 9cbf4f005fa5faa 11 fill in the blank 9cbf4f005fa5faa 12 Feedback Compare the book value amount to the sale price If the book value is less than the sale price, the asset was sold for a gain If the book value is more than the sale price, the equipment was sold for a loss d Assuming that the equipment had been sold on January 3 of Year 4 for $92,700 instead of $86,400, journalize the entry to record the sale If an amount box does not require an entry, leave it blank Cash fill in the blank bd83a0fa9faeffe 2 fill in the blank bd83a0fa9faeffe 3 Accumulated Depreciation Equipment fill in the blank bd83a0fa9faeffe 5 fill in the blank bd83a0fa9faeffe 6 Equipment fill in the blank bd83a0fa9faeffe 8 fill in the blank bd83a0fa9faeffe 9 Gain on Sale of Equipment fill in the blank bd83a0fa9faeffe 11 fill in the blank bd83a0fa9faeffe 12

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6. Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $144,900 has an estimated useful life of 7 years and an

Disposal of Fixed Asset

Equipment acquired on January 6 at a cost of $144,900 has an estimated useful life of 7 years and an estimated residual value of $18,900.

a. What was the annual amount of depreciation for Years 1-3 using the straight-line method of depreciation?

Year	Depreciation Expense
Year 1	$fill in the blank 8af63d05c072fff_1
Year 2	$fill in the blank 8af63d05c072fff_2
Year 3	$fill in the blank 8af63d05c072fff_3

b. What was the book value of the equipment on January 1 of Year 4? $fill in the blank 8af63d05c072fff_4

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Asset cost minus residual value equals depreciable cost.

Asset cost minus accumulated depreciation equals book value. The Accumulated Depreciation account is a permanent account and therefore the balance in the account grows each year of the asset's life.

c. Assuming that the equipment was sold on January 3 of Year 4 for $86,400, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

Cash	fill in the blank 9cbf4f005fa5faa_2	fill in the blank 9cbf4f005fa5faa_3
Accumulated Depreciation-Equipment	fill in the blank 9cbf4f005fa5faa_5	fill in the blank 9cbf4f005fa5faa_6
Loss on Sale of Equipment	fill in the blank 9cbf4f005fa5faa_8	fill in the blank 9cbf4f005fa5faa_9
Equipment	fill in the blank 9cbf4f005fa5faa_11	fill in the blank 9cbf4f005fa5faa_12

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Compare the book value amount to the sale price. If the book value is less than the sale price, the asset was sold for a gain. If the book value is more than the sale price, the equipment was sold for a loss.

d. Assuming that the equipment had been sold on January 3 of Year 4 for $92,700 instead of $86,400, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

Cash	fill in the blank bd83a0fa9faeffe_2	fill in the blank bd83a0fa9faeffe_3
Accumulated Depreciation-Equipment	fill in the blank bd83a0fa9faeffe_5	fill in the blank bd83a0fa9faeffe_6
Equipment	fill in the blank bd83a0fa9faeffe_8	fill in the blank bd83a0fa9faeffe_9
Gain on Sale of Equipment	fill in the blank bd83a0fa9faeffe_11	fill in the blank bd83a0fa9faeffe_12