Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $469,200 has an estimated useful life of 10 years and an estimated residual value of $61,200. a. What was the annual amount of depreciation for Years 1-3 using the straight-line method of depreciation? Year Year 1 Year 2 Year 3 Depreciation Expense 40,800 40,800 40,800 b. What was the book value of the equipment on January 1 of Year 471 346,800 Feedback Check My Work 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 $329,500, journalize the entry to record the sale. If an amount box does not require an entry, leave it blank. Cash Accumulated Depreciation-Equipment Loss on Sale of Equipment Equipment Feedback Check My Work 329,500 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.