Presented below is information related to equipment owned by Swifty Company at December 31, 2020. Cost Accumulated depreciation to date Expected future net cash flows Fair value $6,370,000 750,000 5,100,000 3,630,000 Assume that Swifty will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years and no salvage value.
Presented below is information related to equipment owned by Swifty Company at December 31, 2020. Cost Accumulated depreciation to date Expected future net cash flows Fair value $6,370,000 750,000 5,100,000 3,630,000 Assume that Swifty will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life of 4 years and no salvage value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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Question
Transcribed Image Text:Prepare the journal entry to record depreciation expense for 2021. (If no entry is required, select "No Entry" for the account titles and
enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Account Titles and Explanation
Depreciation Expense
Accumulated Depreciation-Equipment
Debit
0
Credit
0
Transcribed Image Text:Presented below is information related to equipment owned by Swifty Company at December 31, 2020.
Cost
Accumulated depreciation to date
Expected future net cash flows
Fair value
$6,370,000
750,000
5,100,000
3,630,000
Assume that Swifty will continue to use this asset in the future. As of December 31, 2020, the equipment has a remaining useful life
of 4 years and no salvage value.
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