The Corporation purchased machinery for $40,000. The machinery has an estimated salvage value of $5,000 and an estimated useful life of 10 years.

Compute straight-line depreciation for year two.

Compute double declining balance depreciation for year two.

C. What is the adjusting journal entry to record depreciation?

2. The Forum purchased equipment for $80,000. At the end of 2005 the Accumulated Depreciation account had a balance of $21,000. On January 1, 2006, the equipment was sold for $54,000. Compute the amount of gain or loss.