E 7-14 1. Disposal of Fixed Asset Equipment acquired on January 8, 20Y1, at a cost of $280,000, has an estimated useful life of 8 years and an estimated residual value of $30,000. a. What was the annual amount of depreciation for the years 20Y1, 20Y2, and 20Y3, using the straight-line method of depreciation? Depreciation expense 20Y1 20Y2 20Y3 b. What was the book value of the equipment on January 1, 20Y4? c. Assuming that the equipment was sold on January 7, 20Y4, for $185,000, illustrate the effects on the accounts and financial statements of the sale. Statem Income ent of Cash Flows Balance Sheet - Liabilities + s' Equity Assets ted Equipme -depreciat No effect ion Retained nt Jan. 7 Statement of Cash Income Statement Loss on Investi disposal of fixed assets