Cost 41250 residual value 800 years 10 Assuming the equipm

3010xLow

Solution

CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD Purchase Cost of Equipment $                41,250.00 Less: Salvage Value $                      800.00 Net Value for Depreciation $                40,450.00 Usefule life of the Assets 10 years Depreciation per year = Value for Depreciation / 10 years =                      4,045.00 Total Depreciation in 2 years = ($ 4.045 X 2)=                      8,090.00 Book Value = Purchae price - Total Depreciation = Purchase Price = $                      41,250 Less By \"- \" By   Total Depreciation in 2 years = $                        8,090 Book value at the end of 2 years = $                      33,160 CALCULATION OF NET PROFIT AFTER TAX Profit on Sale =Selling price - Book Value Selling Price = $                      10,160 Less : \"-\"   Book Value = $                      33,160 Loss on Sale = $                    -23,000 Date Accounts and explanation Debit Credit Cash $                      10,160 Accumulated Depreciation on equipment $                        8,090 Loss on sale of Equipment $                      23,000       To Equipment $           41,250 (To Record the sale of Equipment)