During 2025 Ivanhoe Corporation had the following transactions: 1. Oil and filter change on company truck $380. 2. Interior painting of office building $2,160. 3. Purchase of new equipment $32,400. 4. Shipping costs on purchase of new equipment $1,240. 5. Installation and testing costs on new equipment $2,000. 6. Repaired building roof $1,460. 7. Engine overhaul on company truck $4,320 (Use Vehicles.). 8. Purchase of a one-year insurance policy on equipment $1,240. 9. Paving of parking lot and driveway $8,100. 10. Purchased supplies of $540. Prepare the appropriate journal entries determining whether the transaction is an operating or capital expenditure. Assume cash payments on all transactions.
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.
During 2025 Ivanhoe Corporation had the following transactions:
1. Oil and filter change on company truck $380.
2. Interior painting of office building $2,160.
3. Purchase of new equipment $32,400.
4. Shipping costs on purchase of new equipment $1,240.
5. Installation and testing costs on new equipment $2,000.
6. Repaired building roof $1,460.
7. Engine overhaul on company truck $4,320 (Use Vehicles.).
8. Purchase of a one-year insurance policy on equipment $1,240.
9. Paving of parking lot and driveway $8,100.
10. Purchased supplies of $540.
Prepare the appropriate
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