On January 1, Year 1, Fairfield Company purchases equipment…
On January 1, Year 1, Fairfield Company purchases equipment for $256,000. The equipment has an estimated useful life of 10 years and expected salvage value of $24,000. The company uses straight-line depreciation. At the end of year 4, Fairfield sells the equipment for $150,000. a. What is the annual depreciation expense related to this equipment? b. What is the equipment’s book value (aka, net book value or carrying value) at the end of the fourth year? c. Apply the given information. What is the amount of the gain or loss on the sale of the equipment at the end of the fourth year?