Homework Answers
Ans.
Step: 1 Calculations for depreciation expense:
Depreciation = (Cost of equipment - Residual value) / Useful life
= ($122,419 - $7,277) / 5
= $115,142 / 5
= $23,028 (rounded)
*In straight line method, the depreciation expense for every year remains same.
Year. Depreciation expense
2018. $23,028
2019. $23,028
Accumulated depreciation. $46,056
*Step:2 Calculation of Book value:
Book value of equipment = Cost of equipment - Accumulated depreciation
= $122,419 - $46,056
= $76,363
*Step: 3 Calculations for gain or loss on disposal:
Loss on disposal = Sales value - Book value of equipment
= $64,012 - $76,363
= -$12,351 (or -12351)
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