Culver Company has the following securities in its portfolio on December 31, 2020. None of these investments are accounted for under the equity method. Investments Cost Fair Value 1,500 shares of Gordon, Inc., Common $67,700 $63,000 5,000 shares of Wallace Corp. Common 164,700 159.600 400 shares of Martin, Inc. Preferred 59,300 61,100 $291,700 $283,700
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.
(a)
31/12/2020 Revenue Account Dr. 9800
To Provision for
(Being market value of Gordon inc. and Wallace corporat. depreciated )
31/12/2020 Investment in Martin inc. a/c Dr. 1800
To Unrealised Appreciation Reserve a/c 1800
(Being market value of Martin inc.appreciated)
(b) sale of Gordon stock
1/03/2021
Bank a/c Dr. 66300
Loss on disposal of investment alc Dr. 1400
To Investment in Gordon inc a/c 67700
(Being sale of Gordon 1500 shares @45 less 1200 fees paid)
Provision for depreciation a/c Dr. 1400
To Loss on disposal of investment a/c 1400
(Being earlier provision provided reversed on disposal of investment a/c)
(c) Purchase of Earnhart corporation:
Journal entries
01/04/2021 (in $)
Bank a/c Dr. 53800
To Investment in Earnhart corporation a/c 53800
(Being purchase 700 of Earnhart @75 plus fees of $1300)
(d)Adjusting entries for 31/12/2021 ($)
1/1/2021 Unrealised Appreciation Reserve a/c Dr. 1800
To Investment in Martin corpor. a/c 1800
(Being this appreciation on closing date has been reversed at the beginning of next year)
31/12/2021
Revenue Account a/c Dr. 10600
To Provision for depreciation Account 10600
(Being market value of Earnhart and Martin shares market value depreciated )
PLEASE HELP WITH LIST OF ACCOUNTS
- Accumulated Other Comprehensive Loss
- Allowance for Doubtful Accounts
- Allowance to Reduce Inventory to Market
Bad Debt Expense- Bonds Payable
- Cash
- Call Option
- Common Stock
- Cost of Goods Sold
- Debt Investments
- Dividend Revenue
- Dividend Receivable
- Equity Investments
- Fair Value Adjustment
- Futures Contract
- Gain on Sale of Investments
- Gain on Settlement of Call Option
- Gain on Settlement of Put Option
- Interest Expense
- Interest Receivable
- Interest Revenue
- Inventory
- Investment Income
- Loss on Impairment
- Loss on Sale of Investments
- Loss on Settlement of Call Option
- Loss on Settlement of Put Option
- No Entry
- Notes Payable
- Paid-in Capital in Excess of Par - Common Stock
- Put Option
- Recovery of Loss from Impairment
Retained Earnings - Revenue from Investment
- Sales Revenue
- Swap Contract
- Unrealized Holding Gain or Loss - Equity
- Unrealized Holding Gain or Loss - Income
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