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A- Gama Company has an equipment that cost $70,000 when bought on January 1, 2020. It has estimated salvage value of $7,000 and an estimated useful life of 5 years. The company uses the straight line

A- Gama Company has an equipment that cost $70,000 when bought on January 1, 2020. It has estimated salvage value of $7,000 and an estimated useful life of 5 years. The company uses the straight line method Instructions: Record the sale of this equipment in the following independent cases, Update and record depreciation at time of sale. (a) Sold for $40,000 on January 1, 2020. (b) Sold for $40,000 on April 1, 2020. (c) Sold for $15,000 on January 1, 2020. (d) Sold for $15,000 on September 1, 2020. (e) Repeat (a), assuming GAMA uses double-declining balance depreciation. (1) Repeat C, assuming GAMA uses double-declining balance depreciation. [12 Marks] B- The Health Hospital purchased a new medical equipment for $90,000. The estimated salvage value is $5,000. The equipment has a useful life of five years and the hospital expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,200 hours in year 2; 2,400 hours in year 3; 1,800 hours in year 4; 2,000 hours in year 5. (a) Instructions Compute the annual depreciation for each of the five years under each of the following methods: (1) straight-line. (2) units-of-activity. (b) If you were the administrator of the hospital, which method would you deem as most appropriate? Justify your answer.

Apr 12 2021 View more View Less

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