Plant Asset Disposal Auspelmyer Company bought a machine for $175,000 five years ago and was depreciating it on a straight-line basis over 12 years to a $25,000 salvage value. Calculate the gain or loss and record the journal entry to record the sale, if: a. The machine is sold for $115,000. b. The machine is sold for $100,000. c. The machine is sold for $112,500.
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.
DEPRECIATION EXPENSE
Depreciation means gradual decrease in value of assets due to normal wear and tear, obsolescence.
In other word depreciation means the gradual diminution, loss or shrinkage in the utility value of assets due to wear & tear in use, effluxion of time or introduction of new technology in the market.
Method of Depreciation :
Straight Line Method
Double Declining Balance Method
Written Down Value Method
Units of Production Method
Sum of Years Digit Method
Step by step
Solved in 4 steps
