3. Counselors of Atlanta purchased equipment on January 1, 2015, for $20,000. Counselors of Atlanta expected the equipment to last for four years and have a residual value of $2,000. Suppose Counselors of Atlanta sold the equipment for $8,000 on December 31, 2017, after using the equipment for three full years. Assume depreciation for 2017 has been recorded. Journalize the sale of the equipment, assuming straight-line depreciation was used. First, calculate any gain or loss on the disposal of the equipment. Market value of assets received Less: Book value of asset disposed of Cost Less: Accumulated Depreciation Gain or (Loss) Now, journalize the sale of the equipment. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Accounts and Explanation Date Debit Credit Dec. 31
3. Counselors of Atlanta purchased equipment on January 1, 2015, for $20,000. Counselors of Atlanta expected the equipment to last for four years and have a residual value of $2,000. Suppose Counselors of Atlanta sold the equipment for $8,000 on December 31, 2017, after using the equipment for three full years. Assume depreciation for 2017 has been recorded. Journalize the sale of the equipment, assuming straight-line depreciation was used. First, calculate any gain or loss on the disposal of the equipment. Market value of assets received Less: Book value of asset disposed of Cost Less: Accumulated Depreciation Gain or (Loss) Now, journalize the sale of the equipment. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Accounts and Explanation Date Debit Credit Dec. 31
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:3. Counselors of Atlanta purchased equipment on January 1, 2015, for $20,000. Counselors of Atlanta expected the equipment to last for four years and have a residual value of $2,000. Suppose
Counselors of Atlanta sold the equipment for $8,000 on December 31, 2017, after using the equipment for three full years. Assume depreciation for 2017 has been recorded. Journalize the sale of
the equipment, assuming straight-line depreciation was used.
First, calculate any gain or loss on the disposal of the equipment.
Market value of assets received
Less: Book value of asset disposed of
Cost
Less: Accumulated Depreciation
Gain or (Loss)
Now, journalize the sale of the equipment. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Accounts and Explanation
Date
Debit
Credit
Dec. 31
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