16. $ During the first two years, the company's truck was driven 65,000 in year 1 and 58,000 miles in year 2, to deliver merchandise to its customers. The company originally purchased the truck for $275,000. If the truck has an estimated life of 7 years or 450,000 miles, with an estimated residual value of $50,000, what amount of depreciation expense should the company record in the second year using the activity-based method?
17. $ The company purchased equipment at the beginning of Year 1 for $500,000. In Years 1-6, it depreciated the asset on a straight-line basis with an estimated useful life of 10 years and a $72,000 residual value. What is the BOOK VALUE of the equipment at the beginning of Year 7?
Use the following to answer questions 18-19
AD Enterprises purchased equipment for $400,000 on January 1, year 1. The equipment is expected to have a 5-year life, with a residual value of $100,000 at the end of its service life.
18. $ Using the 190%-declining balance method, determine depreciation expense for year 2.
19. $ Using the straight-line method, determine book value at the end of year 2.
Use the following to answer questions 20-22
AJ Construction is in the process of closing its operations. It sold its 5-year-old Caterpillar 279C Compact Track Loader for $98,000. The loader originally cost $150,000 and had an estimated useful life of 10 years and an estimated residual value of $35,000. The company uses straight-line depreciation for all equipment.
20. $ Calculate the book value of the loader at the end of the 5th year.
21. $ What was the gain or loss on the sale of the loader at the end of the 5th year, (if loss, put-in front of your answer).
22. Record the sale of the loader at the end of the 5th year.
