Evans Co purchased a machine with an estimated useful life of 10 years for $76,000 on 30 September 20X5. The machine had a residual value of $16,000. What are the ledger entries to record the depreciation charge for the machine in the year ended 30 September 20X8? A Dr Depreciation charge $6,000 Cr Accumulated depreciation $6,000 B Dr Depreciation charge $6,000 Dr Non-current assets $12,000 Cr Accumulated depreciation $18,000 C Dr Accumulated depreciation $6,000 Cr Depreciation charge $6,000 D Dr Accumulated depreciation $18,000 Cr Non-current assets $18,000
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.
Evans Co purchased a machine with an estimated useful life of 10 years for $76,000 on 30 September
20X5. The machine had a residual value of $16,000.
What are the ledger entries to record the
30 September 20X8?
A Dr Depreciation charge $6,000
Cr
B Dr Depreciation charge $6,000
Dr Non-current assets $12,000
Cr Accumulated depreciation $18,000
C Dr Accumulated depreciation $6,000
Cr Depreciation charge $6,000
D Dr Accumulated depreciation $18,000
Cr Non-current assets $18,000
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