Oriole Limited sells equipment on September 30, 2021, for $38,560 cash. The equipment originally cost $156,630 when purchased on January 1, 2019. It has an estimated residual value of $4,290 and a useful life of five years. Depreciation is recorded annually and was last recorded on December 31, 2020, the company’s year end. Prepare the journal entry to update depreciation using the straight-line method to September 30, 2021. Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
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.
Oriole Limited sells equipment on September 30, 2021, for $38,560 cash. The equipment originally cost $156,630 when purchased on January 1, 2019. It has an estimated residual value of $4,290 and a useful life of five years.
Prepare the
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Account Titles and Explanation
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Debit
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Credit
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|---|---|---|
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enter an account title
|
enter a debit amount
|
enter a credit amount
|
|
enter an account title
|
enter a debit amount
|
enter a credit amount
|
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