A company purchased a truck for USD 20,000 on 2010 January 1. The truck has an estimated residual value of USD 5,000 and a useful life of five years. Adjusting entries are prepared only at year-end. The necessary adjusting entry at 2010 December 31, the company’s year-end, is: Group of answer choices Debit Depreciation expense $3,000 Credit Trucks $3,000 Debit Accumulated depreciation trucks $3,000 Credit Depreciation expense – Trucks $3,000 Debit Depreciation expense $4,000 Credit Accumulated depreciation trucks $4,000 Debit Depreciation expense $3,000 Credit Accumulated depreciation – Trucks $3,000
A company purchased a truck for USD 20,000 on 2010 January 1. The truck has an estimated residual value of USD 5,000 and a useful life of five years. Adjusting entries are prepared only at year-end. The necessary adjusting entry at 2010 December 31, the company’s year-end, is: Group of answer choices Debit Depreciation expense $3,000 Credit Trucks $3,000 Debit Accumulated depreciation trucks $3,000 Credit Depreciation expense – Trucks $3,000 Debit Depreciation expense $4,000 Credit Accumulated depreciation trucks $4,000 Debit Depreciation expense $3,000 Credit Accumulated depreciation – Trucks $3,000
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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- A company purchased a truck for USD 20,000 on 2010 January 1. The truck has an estimated residual value of USD 5,000 and a useful life of five years.
Adjusting entries are prepared only at year-end. The necessary adjusting entry at 2010 December 31, the company’s year-end, is:
Group of answer choices
Debit Depreciation expense $3,000 Credit Trucks $3,000
Debit Accumulated depreciation trucks $3,000 Credit Depreciation expense – Trucks $3,000
Debit Depreciation expense $4,000 Credit Accumulated depreciation trucks $4,000
Debit Depreciation expense $3,000 Credit Accumulated depreciation – Trucks $3,000
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