Equipment acquired on January 3, 2007, at a cost of $504,000, has an estimated useful life of
Question:
(a) What was the book value of the equipment at December 31, 2010, the end of the year?
(b) Assuming that the equipment was sold on April 1, 2011, for $315,000, journalize the entries to record (1) depreciation for the three months until the sale date, and (2) the sale of the equipment.
Step by Step Answer:
a Computing the Book Value of the Equipment at the end of the year December 31 2010 b ...View the full answer
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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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