This question has two parts

Part 1

An asset was purchased for $100,000 on January 1, Year 1 and originally estimated to have a useful life of 10 years with a residual value of $10,000. (The firm uses the straight-line method to depreciate all of its assets.)

At the beginning of Year 4, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000.

How much is the amount of depreciation expense for Year 4 using the revised amounts?

a. $27,000

b. $36,250

c. $10,000

d. $17,750

Part 2

Assume a firm sells a depreciable asset (PP&E) that costs $100 and has accumulated depreciation of $40 for a selling price of $100 cash.

The impact of this sale on the accounting equation is to:

a. increase total assets by $100; increase total owners' equity $100

b. decrease total assets by $100; decrease owners' equity by $100

c. increase total assets by $40; increase owners' equity by $40

d. decrease total assets by $40; decrease owners' equity by $40