Monty Enterprises purchased equipment on January 1, 2020, at a cost of €391.000. Monty uses the straight-line depreciation method, a 5-year estimated useful life, and no residual value. At the end of 2020, Independent appraisers determined that the assets have a fair value of €316.000.
Monty Enterprises purchased equipment on January 1, 2020, at a cost of €391.000. Monty uses the straight-line depreciation method, a 5-year estimated useful life, and no residual value. At the end of 2020, Independent appraisers determined that the assets have a fair value of €316.000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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.
Topic Video
Question
answer in text form please (without image)
Transcribed Image Text:Monty Enterprises purchased equipment on January 1, 2020, at a cost of €391,000. Monty uses the straight-line depreciation
method, a 5-year estimated useful life, and no residual value. At the end of 2020, Independent appraisers determined that the assets
have a fair value of €316.000
Prepare the journal entry to record 2020 depreciation using the straight-line method. (Credit account titles are automatically
indented when amount is entered. Do not indent manually)
Account Titles and Explanation
(To record depreciation expense)
eTextbook and Media
List of Accounts
(To adjust the plant assets to fair value and record revaluation
surplus)
Prepare the journal entry to record the revaluation of the equipment. (Credit account titles are automatically indented when amount
is entered. Do not indent manually)
Account Titles and Explanation
eTextbook and Media
Account Titles and Explanation
(To record depreciation expense)
Debit
eTextbook and Media
Prepare the journal entry to record 2021 depreciation, assuming no additional revaluation, (Credit account titles are automatically
Indented when amount is entered. Do not indent manually)
List of Accounts
Debit
Credit
Debit
Credit
Credit
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step 1: Depreciation expense:
VIEWStep 2: Prepare the journal entry to record 2020 depreciation using the straight‐line method:
VIEWStep 3: Prepare the journal entry to record the revaluation of the equipment:
VIEWStep 4: Prepare the journal entry to record 2021 depreciation, assuming no additional revaluation:
VIEWSolution
VIEW
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education