What is recoverable depreciation?

Accounting question what is the annual amount of depreciation etc.?

• Millinery equipment acquired on january 3, 1994, at a cost of $42,000, has an estimated useful life of 4 years and an estimated residual value of $2,500. a. What was the annual amount of depreciation for the years 1994, 1995, and 1996, using the straight-line method of depreciation? b.what was the book value of the equipment on january 1, 1997? c. Assuming that the equipment was sold on january 2, 1997, for $10,500, journalize the entry to record the sale. d. Assuming that the equipment had been sold on january 2, 1997, for $14,500 instead of $10,500, journalize the entry to record the sale.

• Answer:

  Find the range of values that it can depreciate by subtracting the residual value from its cost. $42,000 - $2,500 = $39,500 The equipment has 4 years to "lose" a value of $39,500. In a straight-line method, it goes down the same amount annually. $39,500 / 4 = $9875 that's your answer to part a. Use this information to solve the rest.