Office equipment purchased 5 1/2 years ago for $70,000, with an estimated life of 10 years and no residual value is sold for $20,000 cash. Journalize the following entries: (a) Record the depreciation for the one-half year prior to the sale, using the straight-line method. (b) Record the sale of the equipment. Date Account Title Debit Credit A B
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.
Office equipment purchased 5 1/2 years ago for $70,000, with an estimated life of 10 years and no residual value is sold for $20,000 cash. Journalize the following entries:
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(a) |
Record the |
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(b) |
Record the sale of the equipment.
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