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New tire retreading equipment_Depreciation and sale of equipment




Question;New tire retreading equipment, acquired at a cost;of $140,000 at the beginningof;a fiscal year, has an estimated useful life of four years and an estimated;residual value of $10,000. 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-declining-balance;methodwas selected.;In the first week of the fourth year, the;equipment was sold for $23,300.;Instructions;1.;Determine the annual depreciation expense for each of the estimated four years;of use, the accumulated depreciation at the end of each year, and thebook value of the equipment at;the end of each year by;(a) the straight-linemethod and;(b) the double-declining-balance method.;The following columnarheadings are suggested for each;schedule;Year Depreciation Expense Accumulated;Depreciation, End of Year Book value, End of Year;2. Illustrate the effects on the accounts and;financial statements of the sale.;3.;Illustrate the effects on the accounts and financial statements of the sale,assuming a sale price of;$15,250 instead of $23,300.


Paper#37264 | Written in 18-Jul-2015

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