On January 2, 2016, King Pet purchased fixtures for $60,4000 cash, expecting the fixtures to remain in service for eight years. King Pet has depreciated the fixtures on a straight-Line basis, with $10,000 residual value. On April 30, 2018, King Pet sold the fixtures for $39,200 cash. Record both depreciation expense for 2018 and sale of the fixtures on April 30, 2018. (Assume the modified half-month convention is used. Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
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.
On January 2, 2016, King Pet purchased fixtures for $60,4000 cash, expecting the fixtures to remain in service for eight years. King Pet has
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 5 images
