Prepare the journal entry necessary to record the depreciation expense on the building in 2021. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) b) Compute depreciation expense on the equipment for 2021. (Round answers to 0 decimal places, e.g. 125.) 2021 Depreciation expense = $?
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 1, 2017, Buffalo Company purchased a building and equipment that have the following useful lives, salvage values, and costs.
| Building, 40-year estimated useful life, $53,200 salvage value, $746,800 cost |
| Equipment, 12-year estimated useful life, $10,800 salvage value, $103,500 cost |
The building has been
(a) Prepare the
b) Compute depreciation expense on the equipment for 2021. (Round answers to 0 decimal places, e.g. 125.)
| 2021 Depreciation expense = $? |
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