Equipment acquired at a cost of $126,000 has a book value of $42,000. The equipment had no market value and was discarded. The equipment is sold for $54,000. The equipment is sold for $24,000. Journalize the disposal of the equipment under the assumptions listed above.
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.
Equipment acquired at a cost of $126,000 has a book value of $42,000.
- The equipment had no market value and was discarded.
- The equipment is sold for $54,000.
- The equipment is sold for $24,000.
Journalize the disposal of the equipment under the assumptions listed above.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
