Equipment acquired on January 3, 2005, at a cost of $147,500,has an estimated useful life of eight years and an estimatedresidual value of $17,500.
1. What was the annual amount of depreciation for the years 2005,2006, and 2007, using the straight-line method ofdepreciation?
2. What was the book value of the equipment on January 1,2008?
3. Assuming that the equipment was sold on January 2, 2008, for$95,000, illustrate the effects on the accounts and financialstatements of the sale.
4. Assuming that the equipment had been sold on January 2, 2008,for $100,000 instead of $95,000, illustrate the effects on theaccounts and financial statements of the sale.