Equipment acquired on January 4, 2009, at a cost of $425,000, has an estimated useful life of
Question:
a. What was the annual amount of depreciation for the years 2009, 2010, and 2011, using the straight-line method of depreciation?
b. What was the book value of the equipment on January 1, 2012?
c. Assuming that the equipment was sold on January 9, 2012, for $290,000, journalize the entry to record the sale.
d. Assuming that the equipment had been sold on January 9, 2012, for $310,000 instead of $290,000, journalize the entry to record the sale.
Step by Step Answer:
a 2009 depreciation expense 40000 425000 650009 2010 depreciation expense 400...View the full answer
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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