On January 2, 2015 Lev Company purchases equipment for use in fabrication of a part for one of its key products. The equipment costs $95,000, and its estimated useful life is 5 years, after which it is expected to be sold for $10,000.

Required:

a) Show how the equipment is reported on Levs balance sheet at the end of the third year assuming straight-line depreciation.

b) Lev decides to sell the equipment on January 2^nd of 2018 for $40,000. Prepare the journal entries to record the sale of the asset assuming that Lev uses SL depreciation, and then prepare the entry for the sale assuming that Lev uses DDB.