# Business Problem: Depreciation

Problem 1: On January 1, Year 1, Jayco purchased a machine for $6000. It had an estimated salvage value of $400 and a life of seven years. The straight-line method of depreciation was used. At mid-year in Year 4, Jayco sold the machine for $4500 cash.

Required:

a. What is the book value of the machine a the time of the sale?

b. Give the journal entry to record the sale of the machine?

Account Description......................Debit.................Credit

Problem 2: Assume a firm has acquired an asset for $100 000 on January 1, Year 1. The asset has a 6-year life and a salvage value of $10 000. The firm has a choice between using straight-line or sum-of-year's-digits depreciation methods. Calculate the depreciation expense for each of the six ears using each method.

............Straight-Line.............Sum-of-the Year's Digits

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

https://brainmass.com/business/depreciation/82480

#### Solution Summary

The solution approached two different problems - journal entry on disposal of machine and depreciation calculations using straight line and sum of year digits. The solution is enclosed within a Word document.