Focus Ltd. purchased machinery on July 1, 2016, at a total cost of $95,000. The machinery's estimated useful life is 10 years or 60,000 hours, and its residual value is $5,000. From July 1, 2016 to December 31, 2019, the machine was used as follows:

2016 2,800 hours

2017 5,200 hours

2018 6,700 hours

2019 6,300 hours

Focus Ltd has a December 31 year end.

Part A Calculate the annual depreciation under of the following methods (Note the time frame for which depreciation must be calculated): a. straight-line for the entire life of the equipment.

b. units-of-production for July 1, 2016 to December 31, 2019 (round rate to two digits following the decimal point)

c. double-diminishing-balance for July 1, 2016 to December 31, 2019 (round depreciation amounts to nearest dollar)

Part B On January 1, 2020, management of Focus Ltd decided to sell the equipment for $52,000. Assume that Focus has used the straight-line method of depreciation for the equipment.

a. Calculate the gain or loss on the sale of the equipment. You must indicate if the sale resulted in a gain or a loss.

b. Prepare the journal entry to record the sale of the equipment on January 1, 2020.

Part C Assume that on January 1, 2020, instead of selling the equipment, management of Focus Ltd revised the remaining estimated useful life of the equipment to 3 years. (Three years from January 1, 2020.) The estimated residual value did not change.

a. Calculate the revised depreciation for 2020 assuming that the company uses the straight-line method.

b. Prepare the journal entry to record depreciation for 2020.