4. Record the depreciation expense and any other adjusting entries related to the vehicle on December 31, 2025. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
4. Record the depreciation expense and any other adjusting entries related to the vehicle on December 31, 2025. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Topic Video
Question
Transcribed Image Text:Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to
purchase a used Suburban on July 1, 2025, for $15,000. They expect to use the Suburban for five years and then sell the
vehicle for $6,000. The following expenditures related to the vehicle were also made on July 1, 2025:
•
.
The company pays $2,550 to GEICO for a one-year insurance policy.
The company spends an extra $6,000 to repaint the vehicle, placing the Great Adventures logo on the front hood,
back, and both sides.
. An additional $2,750 is spent on a deluxe roof rack and a trailer hitch.
The painting, roof rack, and hitch are all expected to increase the future benefits of the vehicle for Great Adventures. In
addition, on October 22, 2025, the company pays $1,900 for basic vehicle maintenance related to changing the oil,
replacing the windshield wipers, rotating the tires, and inserting a new air filter.
4. Record the depreciation expense and any other adjusting entries related to the vehicle on December 31, 2025. (If no entry is
required for a transaction/event, select "No Journal Entry Required" in the first account field.)
View transaction list
Journal entry worksheet
1
2
Record the depreciation expense for the vehicle.
Note: Enter debits before credits.
Date
December 31, 2025
General Journal
Debit
Credit
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