A firm purchased a new piece of farm equipment on 7/1/ Year1 for $80000. The machine has an expected useful life of 5 years and a $26000 residual value. Assume the firm uses the straight-line method for computing depreciation expense, and prepares annual financial statements at December 31.

How much depreciation expense should be recorded in the adjusting entry on December 31, Year1?

How much depreciation expense should be recorded in the adjusting entry on December 31, Year2?

What is the net book value of the machine at December 31, Year1?

What is the net book value of the machine at December 31, Year2?