Harris Company purchased a piece of equipment for $250,000. The equipment had a residual value of $50,000 and a useful life of 10 years. 1) Calculate the accumulated depreciation at the end of year 3. 2) Calculate the book value at the end of year 3. 3) The equipment was sold at the beginning of year 4 for $176,000. Journalize the sale of the fixed asset.
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.
Harris Company purchased a piece of equipment for $250,000. The equipment had a residual value of $50,000 and a useful life of 10 years.
1) Calculate the
2) Calculate the book value at the end of year 3.
3) The equipment was sold at the beginning of year 4 for $176,000. Journalize the sale of the fixed asset.
The following are a select list of accounts from Harris Company. Choose from this list to complete the
Cash
Inventory
Equipment
Accumulated depreciation
Accounts payable
Unearned revenue
Notes payable
Harris, capital
Harris, drawing
Sales
Cost of goods sold
Selling expense
Administrative expense
Gain on sale of equipment
Loss on sale of equipment
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1/1/Year 4 |
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