In 2003, Vender Manufacturing Inc. purchased three capital assets. Information concerning the assets is summarized below: Estimated Salvage Useful Life Asset Acquired Cost Value In Years Amortization Method Bender Feb. 1/03 $7,000 $ 1,000 10 Straight-line Boxer Mar. 1/03 60,000 10,000 5 Units-of-activity Forklift Apr. 1/03 84,000 32,000 10 30% Declining balance For the units-of-activity method, lifetime machine hours are expected to be 5,000. Actual hours of use in 2003 were 1,369. Instructions (a) Calculate the amortization expense for each machine in 2003. (b) On January 1, 2004, the company had to dispose of the bender, they also sold the forklift for $76,000. Journalize both disposal entries. Action Plan Amortizable cost is original cost estimated salvage or residual value. Under the straight-line method, the amortization rate is applied to amortizable cost. Under the declining-balance method, the amortization rate is applied to the net book value at the beginning of the year. Under the units-of-activity method, amortization per unit is determined, then this rate is multiplied by the units of activity during the period. To record the dispositions, determine the net book value of the assets at the time of the disposal and calculate the gain or loss by comparing the proceeds on disposition, if any, to the book value. The journal entry removes the book values, cost and accumulated amortization from the books, and records the gain or loss