Problem
On July 1, 2014, IMA Big Corp purchased a machine costing $250,000 by putting 20% down and borrowing the remainder from the bank. The machine has an estimated useful life of 5 years, and an estimated salvage value of 10%. IMA uses straight-line depreciation and is a calendar year-end (12/31^st).
REQUIRED:
1) Account for the purchase on 7/1/14 (using the Balance Sheet Equation)
2) At year-end 2014, calculate and account for (using the Balance Sheet Equation) depreciation expense
3) At year-end 2015, calculate and account for (using the Balance Sheet Equation) depreciation expense
4) At 12/31/14, show the Net Book Value
5) At 12/31/15, show the Net Book Value.