Can I restore my 2nd generation ipod touch to its factory settings?

I would like to let another person use my old 2nd generation ipod. If I restore it to its factory settings will I be able to add apps back on it under a different apple id? The ipod is old so many apps are not compatable.

Apps are tied to the acount/ID that purchased them.
Before you restore the iPod make sure that your iTunes library has the version of apps that are presently installed on your iPod. Many apps have been update and the update apps are not compatible with the 2G iPod. I would do that by deleting the apps from your iTunes library and then transfer them to iTunes. See:
iTunes Store: Transferring purchases from your iOS device or iPod to a computer
In iTunes 11 use Control+B to show the Menu bar then go to iTunes>File>Devices>Transfer Purchases
You can't add them back under another iD

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