Exchanging plant assets Micron Precision, Inc. purchased a computer for $2,500, debiting Computer Equipment. During 2016 and 2017, Micron Precision, Inc. recorded total depreciation of $1,600 on the computer. On January 1, 2018, Micron Precision, Inc. traded in the computer for a new one, paying $2,100 cash. The fair market value of the new computer is $3,900. Journalize Micron Precision, Inc.’s exchange of computers. Assume the exchange had commercial substance.
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.
Exchanging plant assets
Micron Precision, Inc. purchased a computer for $2,500, debiting Computer Equipment. During 2016 and 2017, Micron Precision, Inc. recorded total
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