LMN Company purchased factory equipment for $64,000 on January 1, 2016. The equipment is estimated to have a useful life of 12 years, at which point it will have a residual value of $4,000. LMN Company uses the straight-line method to account for depreciation. What is the journal entry on December 31, 2016 to record the yearly depreciation? Select one: a. Debit depreciation expense $5,000; Credit Equipment $5,000 b. Debit depreciation expense $5,333; Credit Accumulated depreciation: $5,333 c. Debit depreciation expense $5,000; Debit accumulated depreciation: $5,000 d. Debit depreciation expense $5,000; Credit Accumulated depreciation: $5,000

LMN Company purchased factory equipment for $64,000 on January 1, 2016. The equipment is estimated to have a useful life of 12 years, at which point it will have a residual value of $4,000. LMN Company uses the straight-line method to account for depreciation. What is the journal entry on December 31, 2016 to record the yearly depreciation? Select one: a. Debit depreciation expense $5,000; Credit Equipment $5,000 b. Debit depreciation expense $5,333; Credit Accumulated depreciation: $5,333 c. Debit depreciation expense $5,000; Debit accumulated depreciation: $5,000 d. Debit depreciation expense $5,000; Credit Accumulated depreciation: $5,000

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Description: LMN Company purchased factory equipment for $64,000 on January 1, 2016. The equipment is estimated to have a useful life of 12years, at which point it will have a residual value of $4,000. LMN Company uses the straight-line method to account fordepr

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

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Question

LMN Company purchased factory equipment for $64,000 on January 1, 2016. The equipment is estimated to have a useful life of 12
years, at which point it will have a residual value of $4,000. LMN Company uses the straight-line method to account for
depreciation. What is the journal entry on December 31, 2016 to record the yearly depreciation?
Select one:
a. Debit depreciation expense $5,000; Credit Equipment $5,000
b. Debit depreciation expense $5,333; Credit Accumulated depreciation: $5,333
c. Debit depreciation expense $5,000; Debit accumulated depreciation: $5,000
d. Debit depreciation expense $5,000; Credit Accumulated depreciation: $5,000

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