Answer:
a. 19,500
b. $20,500
c. Gain of $9,500
Explanation:
a.
Straight Line depreciation is a method of depreciation in which the cost of the asset net of residual value is divided over useful life.
Depreciation rate = ( Cost - Salvage Value ) / useful life = ($82,000 - $4,000) / 4 = $19,500
Depreciation charged in 2018 = $19,500
Depreciation charged in 2019 = $19,500
Accumulate depreciation as on December 31, 2019 = $39,000
b.
In Double Declining method Accelerated depreciation is charged. The depreciation charged in this method is double of the charged in straight-line depreciation method.
Depreciation rate = 2 x (1/useful life) x100 = 2 x (1/4 years) x100 = 50%
50% will be charged to Book value of the projector.
Depreciation charged in 2018 = $82,000 x 50% = $41,000
Depreciation charged in 2019 = ( $82,000 - $41,000 ) x 50% = $20,500
Accumulate depreciation as on December 31, 2019 = $41,000 + $20,500 = $61,500
Book value as on December 31, 2019 = $20,500
c.
Sale proceeds = $30,000
Gain on sale = $30,000 - $20,500 = $9,500
There is a gain of $9,500 based on Double declining method
It recorded as follow
Dr. Cash $30,000
Dr.Accumulated Depreciation $61,500
Cr. Gain on sale $9,500
Cr. Projector $82,000
