The Fraser River Corporation has purchased a new piece of factory equipment on January 1, 2024, and wishes to compare three depreciation methods: straight-line, double-declining-balance, and units-of-production.

The equipment costs $460,000 and has an estimated useful life of four years, or 10,000 machine hours. At the end of four years, the equipment is estimated to have a residual value of $40,000.

At December 31, 2024, Fraser River is trying to determine if it should sell the factory equipment. Fraser River will only sell the factory equipment if the company earns a gain of at least $12,000. For each of the depreciation methods, what is the minimum amount that Fraser River will sell the factory equipment for in order to have a gain of $12,000?

Transactions:

*Journalize the entry to record the equipment purchase assuming it was paid for with cash.

* Record depreciation expense on the equipment for Year 1 by the straight-line method.

* Record depreciation expense on the equipment for Year 2 by the units of production method.

*Record depreciation expense on the equipment for Year 3 by the double declining balance method.

DATA Cost Residual Value Useful Life (Years) Useful Life (Hours) Gain End of Year 1 Straight Line Year Depreciable Cost Rate Depreciation Expense Accumulated Depreciation Book Value 1 2 3 4 The minimum amount to sell the factory equipment in order to have a gain of $12,000 at the end of Year 1? Rate Double Declining Balance Book Value Year Beginning of Year 1 2 Depreciation Expense Accumulated Depreciation Book Value End of Year 4 The minimum amount to sell the factory equipment in order to have a gain of $12,000 at the end of Year 1? Units of Production Year Depreciation Per Unit Machine Hours Depreciation Expense Accumulated Depreciation Book Value 1 2 3 2.900 2,400 2.980 1.920 4 The minimum amount to sell the factory equipment in order to have a gain of $12,000 at the end of Year 1