Answer:
a. What is the amount of depreciation expense for the first full year the company owns the equipment if the company adopts the straight-line method?
depreciable value = $80,000 - $5,000 = $75,000
depreciation expense per year = $75,000 / 5 years = $15,000
b. What is the journal entry the company would make to record depreciation expense?
December 31, 202x, depreciation expense
Dr Depreciation expense 15,000
Cr Accumulated depreciation - equipment 15,000
c. What is the book value of the equipment after it has been owned for 1 full year (hint use part a)?
book value = purchase price - accumulated depreciation = $80,000 - $15,000 = $65,000
d. What is the amount of depreciation for the first year if the company did not purchase the equipment until July 1st and uses the straight-line method?
depreciation expense = $15,000 x 1/2 = $7,500
e. What is the book value of the equipment after it has been owned for 1/2 years?
book value = $80,000 - $7,500 = $72,500