Assume that on January 2, 20X6, Sanoma of Michigan purchased fixtures for $8,100 cash, expecting the fixtures to remain in service for five years. Sanoma has depreciated the fixtures on a double-declining-balance basis, with $1,400 estimated residual value. On October 31, 20X7, Sanoma sold the fixtures for $2,600 cash. Requirement 1. Record both the depreciation expense on the fixtures for 20X7 and the sale of the fixtures. Apart from your journal entry, also show how to compute the gain or loss on Sanoma's disposal of these fixtures. Start by recording depreciation expense on the fixtures for 20X7. (Record debits first, then credits. Explanations are not required. Leave unused cells blank.) Journal Entry Date Oct 31 Accounts Debit Credit
Assume that on January 2, 20X6, Sanoma of Michigan purchased fixtures for $8,100 cash, expecting the fixtures to remain in service for five years. Sanoma has depreciated the fixtures on a double-declining-balance basis, with $1,400 estimated residual value. On October 31, 20X7, Sanoma sold the fixtures for $2,600 cash. Requirement 1. Record both the depreciation expense on the fixtures for 20X7 and the sale of the fixtures. Apart from your journal entry, also show how to compute the gain or loss on Sanoma's disposal of these fixtures. Start by recording depreciation expense on the fixtures for 20X7. (Record debits first, then credits. Explanations are not required. Leave unused cells blank.) Journal Entry Date Oct 31 Accounts Debit Credit
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 7E: Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for...
Related questions
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
College Accounting (Book Only): A Career Approach
Accounting
ISBN:
9781337280570
Author:
Scott, Cathy J.
Publisher:
South-Western College Pub