Question 1:

A warehouse with a cost of $500,000 has an estimated residual value of $120,000, has an estimated useful life of 40 years, and is depreciated by the straight-line method.

1. Determine the amount of the annual depreciation.
2. Determine the book value at the end of the twentieth year of use.
3. Assuming that at the start of the twenty-first year the remaining life is estimated to be 25 years and the residual value is estimated to be $150,000, determine the depreciation expense for each of the remaining 25 years.

Question 2:

Equipment was acquired at the beginning of the year at a cost of $91,000. The equipment was depreciated using the straight-line method based on an estimated useful life of nine years and an estimated residual value of $10,000.

1. What was the depreciation for the first year?
2. Assuming the equipment was sold at the end of the second year for $78,000, determine the gain or loss on the sale of the equipment.
3. Journalize the entry to record the sale.