Batman Inc. uses revaluation accounting for its Machinery. The following information has been provided. July 7, 2022: Purchased Machinery for $250 000 on account. Estimated Useful Life: 10 years Residual Value: $0 Depreciation Method: Straight-line (nearest full month) Frequency of Revaluation: Annually Valuation Data July 7, 2022: $250 000 December 31, 2022: $234 000 December 31, 2023: $220 000 Prepare the following entries for December 2022. 1. What is the journal entry to record depreciation for December 2022? 2. The journal entry to eliminate accumulated depreciation December 2022 3. To record change in report of value of asset for December 2022
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.
Batman Inc. uses revaluation accounting for its Machinery. The following information has been provided. July 7, 2022: Purchased Machinery for $250 000 on account. Estimated Useful Life: 10 years Residual Value: $0
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