On January 1, 2021, Riverbed Company purchased on credit machinery costing $165,000 and incurred $5.705 in installation costs. The machinery has an estimated useful life of 15 years and a residual value of $10,790. The company uses the straight-line method of depreciation. At the end of 2022, Riverbed recorded depreciation and assessed the asset, determining a recoverable amount of $137,800. Riverbed sold the equipment to Voilex Corporation on June 30, 2023, for $135,500. Prepare the necessary entries assuming Riverbed has a December 31 year-end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. List all debit entries before credit entries. Round answers to 0 decimal places, eg. 5,275. Record journal entries in the order presented in the problem) Account Titles and Explanation Debit Machinery Date 2021 1,2021 31.2022 <31,2022 ne 30, 2023 30,2023 Cash Depreciation Expense Accumulated Depreciation Machinery (To record depreciation expense) Depreciation Expense Accumulated Depreciation Machinery (To record depreciation expense) Loss on Impairment Accumulated Depreciation - Machinery (To record loss on impairment) Depreciation Expense Accumulated Depreciation - Machinery (To record depreciation expense) Cash Accumulated Depletion Machinery 165000 5705 10661 Credit 165000 5705 10661
On January 1, 2021, Riverbed Company purchased on credit machinery costing $165,000 and incurred $5.705 in installation costs. The machinery has an estimated useful life of 15 years and a residual value of $10,790. The company uses the straight-line method of depreciation. At the end of 2022, Riverbed recorded depreciation and assessed the asset, determining a recoverable amount of $137,800. Riverbed sold the equipment to Voilex Corporation on June 30, 2023, for $135,500. Prepare the necessary entries assuming Riverbed has a December 31 year-end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. List all debit entries before credit entries. Round answers to 0 decimal places, eg. 5,275. Record journal entries in the order presented in the problem) Account Titles and Explanation Debit Machinery Date 2021 1,2021 31.2022 <31,2022 ne 30, 2023 30,2023 Cash Depreciation Expense Accumulated Depreciation Machinery (To record depreciation expense) Depreciation Expense Accumulated Depreciation Machinery (To record depreciation expense) Loss on Impairment Accumulated Depreciation - Machinery (To record loss on impairment) Depreciation Expense Accumulated Depreciation - Machinery (To record depreciation expense) Cash Accumulated Depletion Machinery 165000 5705 10661 Credit 165000 5705 10661
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:On January 1, 2021, Riverbed Company purchased on credit machinery costing $165,000 and incurred $5.705 in installation costs.
The machinery has an estimated useful life of 15 years and a residual value of $10,790. The company uses the straight-line method of
depreciation. At the end of 2022, Riverbed recorded depreciation and assessed the asset, determining a recoverable amount of
$137,800. Riverbed sold the equipment to Voilex Corporation on June 30, 2023, for $135,500.
Prepare the necessary entries assuming Riverbed has a December 31 year-end. (Credit account titles are automatically indented when the
amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all
debit entries before credit entries. Round answers to 0 decimal places, e.g. 5,275. Record journal entries in the order presented in the problem)
Account Titles and Explanation
Credit
Date
2021
x 1.2021
31.2022
31, 2022
ne 30, 2023
230, 2023
Machinery
Cash
Depreciation Expense
Accumulated Depreciation Machinery
(To record depreciation expense)
Depreciation Expense
Accumulated Depreciation Machinery
(To record depreciation expense)
Loss on Impairment
Accumulated Depreciation - Machinery
(To record loss on impairment)
Depreciation Expense
Accumulated Depreciation-Machinery
(To record depreciation expense)
Cash
Accumulated Depletion
Machinery
Gain on Disposal of Machinery
(To record disposal of machinery)
Debit
165000
5705
10661
165000
5705
10661
DOODI
10000
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