Disposal of Fixed Asset

Equipment acquired on January 8, 20Y1, at a cost of $690,000, has an estimated useful life of 12 years and an estimated residual value of $124,200.

a. What was the annual amount of depreciation for the years 20Y1, 20Y2, and 20Y3, using the straight-line method of depreciation? Round annual depreciation to the nearest dollar and use this amount in your follow-on calculations.

	Depreciation expense
20Y1	$fill in the blank 1
20Y2	$fill in the blank 2
20Y3	$fill in the blank 3

b. What was the book value of the equipment on January 1, 20Y4? $fill in the blank 4

For decreases in accounts or outflows of cash, enter your answers as negative numbers. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank.

c. Assuming that the equipment was sold on January 2, 20Y4, for $207,000, illustrate the effects on the accounts and financial statements of the sale.

		Balance Sheet
		Assets					=	Liabilities	+	Stockholders' Equity
		Accounts receivableAccumulated depreciation - equipmentCashNo effect	+	Accumulated depreciation - equipmentEquipmentSuppliesNo effect	-	Accumulated depreciation - equipmentCashDepreciation expenseNo effect	=	Accounts payableCashRetained earningsNo effect	+	Accounts payableCapital stockRetained earningsNo effect
	Jan. 2.	fill in the blank 10		fill in the blank 11		fill in the blank 12		fill in the blank 13		fill in the blank 14
	Statement of Cash Flows							Income Statement
	FinancingInvestingOperatingNo effect	fill in the blank 16						Gain on disposal of fixed assetsLoss on disposal of fixed assetsSalesNo effect		fill in the blank 18

d. Assuming that the equipment was sold on January 2, 20Y4, for $828,000 instead of $207,000, illustrate the effects on the accounts and financial statements of the sale.

		Balance Sheet
		Assets					=	Liabilities	+	Stockholders' Equity
		Accounts payableAccounts receivableCashNo effect	+	Accounts payableEquipmentSuppliesNo effect	-	Accounts payableAccumulated depreciation - equipmentDepreciation expenseNo effect	=	Accounts payableCapital stockCashNo effect	+	Capital stockRetained earningsSalesNo effect
	Jan. 7.	fill in the blank 24		fill in the blank 25		fill in the blank 26		fill in the blank 27		fill in the blank 28
	Statement of Cash Flows							Income Statement
	FinancingInvestingOperatingNo effect	fill in the blank 30