Use the following information to answer the questions below...

Use the Following Information to Answer the Questions Below.. A. On June 5th, 2014 Our Business Purchased a YACHT for $2,400,000 Cash. B. The YACHT has an estimated Useful Life of 10 years and will be Depreciated using the Straight Line Method of Depreciation. C. On March 31, 2016 The Business Sold the YACHT for $1,000,000 Cash. D. Show all of your Answers as a Number only, NO Dollar Signs, Decimals, or Commas. show any losses inside parens like this (1000).

Transcript

00:01 Equipment acquired on january 6th at a cost of $401 ,300 has an estimated useful life of 18 years and an estimated residual value of $25 ,100.

00:15 A, what was the annual amount of depreciation for years 1 through 3 using the straight line method for depreciation? b, what was the book value of the equipment on january 1st of year 3? c, assuming the equipment was sold on january 3rd of year 3rd of year? year four for $315 ,000, journalize the entry to record the sale.

00:37 D, assuming that the equipment had been sold on january 3rd of year four for $342 ,000 instead of $315 ,000, journalize the entry to record the sale.

00:50 So part a, we're using straight line depreciation.

01:00 So depreciation is calculated as the acquisition cost minus the salvage value over the estimated useful life.

01:24 These are all numbers they gave us in the problem itself.

01:28 So we can just go ahead and substitute in.

01:31 And when i do that, i get the $401 ,300 that it cost to buy it minus the $25 ,100, the salvage value at the end.

01:43 And the estimated useful life was 18 years.

01:47 And when we take 401 ,300 minus 25 ,100, and then divide that number by 18, we get a value of $20 ,900 per year.

02:01 So year one is $20 ,900, your two is another $20 ,900, and year three is another $20 ,900.

02:11 Part b, we're going to figure out the book value on january 1st of year three.

02:36 We're going to have the particulars or the details in one column and the amounts or the value in the other.

02:50 So we have the acquisition cost of equipment and that was 401 ,300, less the accumulated depreciation at the end of year two.

03:33 So this is going to be 20 ,900 times two for a value of.

03:40 $41 ,800.

03:53 We're subtracting those numbers because we said less, which makes the book value of equipment $359 ,500.

04:28 Part c, we're going to record the journal entry to record the sale.

04:38 We have the date, account title, and explanation...

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