sed conveyor equipment with a list price of $15,000. Presented below are three independent cases related to the equipment. (Round to the nearest dollar.) Instructions: Prepare the general journal entries required to record the acquisition and payment in each of the independent cases below. 6.1 UMPI paid cash for the equipment 8 days after the purchase. The vendor’s credit terms are 2/10, n/30. Assume that equipment purchases
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.
UMPI Corporation purchased conveyor equipment with a list price of $15,000. Presented below are three independent cases related to the equipment. (Round to the nearest dollar.)
Instructions: Prepare the general
6.1 UMPI paid cash for the equipment 8 days after the purchase. The vendor’s credit terms are 2/10, n/30. Assume that equipment purchases are initially recorded gross.
6.2 UMPI traded in equipment with a book value of $2,000 (initial cost $8,000), and paid $8,500 in cash. The old equipment could have been sold for $1,400 at the date of trade. (The exchange did have commercial substance.)
6.3 UMPI signed an interest-bearing note for the equipment on the date of purchase. The note was due in one year and was paid on time.
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