Scheuller Company had machinery that had originally cost $246,000. The machinery was three years old and had been depreciated using the double-declining-balance method, over a five-year useful life with a residual value of $18,000. Answer each of the following questions: a. If the company sold the machinery for $105,000, prepare a journal entry to record the sale. b. If the company sold the machinery for $48,000, prepare a journal entry to record the sale.
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.
Scheuller Company had machinery that had originally cost $246,000. The machinery was three years old and had been
a. If the company sold the machinery for $105,000, prepare a
b. If the company sold the machinery for $48,000, prepare a journal entry to record the sale.
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