(A) Disposal of Fixed Asset

Equipment acquired on January 6 at a cost of $299,500, has an estimated useful life of 7 years and an estimated residual value of $39,100.

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

b. What was the book value of the equipment on January 1 of Year 4?

c. Assuming that the equipment was sold on January 3 of Year 4 for $178,500, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

d. Assuming that the equipment had been sold on January 3 of Year 4 for $191,700 instead of $178,500, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank.

(B)

Comparing Three Depreciation Methods

Waylander Coatings Company purchased waterproofing equipment on January 6 for $498,800. The equipment was expected to have a useful life of four years, or 8,800 operating hours, and a residual value of $41,200. The equipment was used for 3,300 hours during Year 1, 2,700 hours in Year 2, 1,600 hours in Year 3, and 1,200 hours in Year 4.

Required:

1. Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

2. What method yields the highest depreciation expense for Year 1?

3. What method yields the most depreciation over the four-year life of the equipment?

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $299,500, has an estimated useful life of 7 years and an estimated residual value of $39,100. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation? Year Depreciation Expense Year 1 Year 2 Year 3 b. What was the book value of the equipment on January 1 of Year 4? C. Assuming that the equipment was sold on January 3 of Year 4 for $178,500, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. d. Assuming that the equipment had been sold on January 3 of Year 4 for $191,700 instead of $178,500, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Comparing Three Depreciation Methods Waylander Coatings Company purchased waterproofing equipment on January 6 for $498,800. The equipment was expected to have a useful life of four years, or 8,800 operating hours, and a residual value of $41,200. The equipment was used for 3,300 hours during Year 1, 2,700 hours in Year 2, 1,600 hours in Year 3, and 1,200 hours in Year 4. Required: 1. Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar. Depreciation Expense Year Straight-Line Method Units-of-Output Method Double-Declining-Balance Method Year 1 Year 2 Year 3 Year 4 Total 2. What method yields the highest depreciation expense for Year 1? 3. What method yields the most depreciation over the four-year life of the equipment