New lithographic equipment, acquired at a cost of $875,000 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $75,300

New lithographic equipment, acquired at a cost of $875,000 on March 1 of Year 1 (beginning of the fiscal year), has an estimated useful life of five years and an estimated residual value of $75,300. The manager requested information regarding the effect of alternative methods on the amount of depreciation expense each year. On March 4 of Year 5, the equipment was sold for $128,100. Required: 1. Determine the annual depreciation expense for each of the estimated five 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 the following methods: a. Straight-line method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $ $ $ 2 $ $ $ 3 $ $ $ 4 $ $ $ 5 $ $ $ b. Double-declining-balance method Year Depreciation Expense Accumulated Depreciation, End of Year Book Value, End of Year 1 $ $ $ 2 $ $ $ 3 $ $ $ 4 $ $ $ 5 $ $ $ Feedback Asset cost minus residual value equals depreciable cost. Sum the yearly depreciation to determine total depreciation. In the first year, the balance in the accumulated depreciation account is zero. Remember not to reduce book value below residual value. 2. Journalize the entry to record the sale assuming that the manager chose the double declining-balance method. If an amount box does not require an entry, leave it blank. Cash Accumulated Depreciation-Equipment Equipment Gain on Sale of Equipment Feedback Determine the book value at the point of sale. Compare the book value amount to the sale price. If the book value is less than the sale price, the asset was sold for a gain. If the book value is more than the sale price, the equipment was sold for a loss. If you no longer own the asset what accounts would need to be eliminated? 3. Journalize the entry to record the sale in (2) assuming that the equipment was sold for $110,000 instead of $128,100. If an amount box does not require an entry, leave it blank. Cash Accumulated Depreciation-Equipment Loss on Sale of Equipment Equipment Feedback

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