Quigley Co. bought a machine on January 1, 2019 for $2,800,000. It had a $240,000 estimated residual value and a ten-year life. An expense account was debited on the purchase date. Quigley uses straight-line depreciation. This was discovered in 2021. Instructions Prepare the entry or entries related to the machine for 2021. Ignore taxes.
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.
Quigley Co. bought a machine on January 1, 2019 for $2,800,000. It had a $240,000 estimated residual value and a ten-year life. An expense account was debited on the purchase date. Quigley uses straight-line
Instructions
Prepare the entry or entries related to the machine for 2021. Ignore taxes.
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