Question $2(30$ marks$)$

New tire retreading equipment, acquired at a cost of $$110,000$ at the beginning of a fiscal year, has an estimated useful life of four years and an estimated residual value of $$8,000.$ The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On the basis of the data presented to the manager, the double$-$decliningbalance method was selected.

In the first week of the fourth year, the equipment was sold for $$18,000.$

Required:

$($i$)$ Determine the annual depreciation expense for each of the estimated four years of use, the accumulated depreciation at the end of each year, and the book value of the equipment at the end of each year by

$($a$)$ the straight$-$line method $(10$ marks$)$

$($b$)$ the double$-$declining$-$balance method. $(10$ marks$)$

Use the following columnar headings for each schedule: Yearl Depreciation Expense$/$ Accumulated Depreciation$/$ Book Value

$($ii$)$ Journalize the entry to record the sale. Show whether the company made a profit or incurred a loss and the amount

$(5$ marks$)$

$($iii$)$ Journalize the entry to record the sale, assuming that the equipment sold for $$10,500$ at the end of June of the $4$ th year. Show whether the company made a profit or incurred a loss and the amount.

$(5$ marks$)$