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Barton Enterprises purchased equipment on January 1, 2020, at a cost of 350,000. Barton uses the straight-line

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Barton Enterprises purchased equipment on January 1, 2020, at a cost of €350,000. Barton uses the straight-line depreciation method, a 5-year estimated useful life, and no residual value. At the end of 2020, independent appraisers determined that the assets have a fair value of €320,000.


Instructions
a. Prepare the journal entry to record 2020 depreciation using the straight-line method.
b. Prepare the journal entry to record the revaluation of the equipment.
c. Prepare the journal entry to record 2021 depreciation, assuming no additional revaluation.

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a Depreciation Expense 70000 Accumulated Depreciatio...View the full answer


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Accounting Principles

Accounting Principles

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IFRS global edition

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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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