George Company purchased a van on May 1, 2018 for $800,000. Estimated life of the van was five years, and its estimated residual value was $80,000. George uses the straight line method of depreication. The journal entry to record the depreciation expense for 2019 on the van would include: A) Debit Depreciation expense for $192,000 B) Credit Accumulated Depreciation for $192,000 C) Debit Depreciation expense for $96,000 D) Debit accumulated depreciation for $96,000
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.
George Company purchased a van on May 1, 2018 for $800,000. Estimated life of the van was five years, and its estimated residual value was $80,000. George uses the
A) Debit Depreciation expense for $192,000
B) Credit
C) Debit Depreciation expense for $96,000
D) Debit accumulated depreciation for $96,000
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