The balance sheets of Tully Corp. showed the following at December 31, 2020, and 2019: December 31, 2020 $ 68,200 Equipment, less accumulated depreciation of $88,609 at December 31, 2020, and $55,375 at December 31, 2019. Required: a. If there have not been any purchases, sales, or other transactions affecting this equipment account since the equipment was first acquired, what is the amount of depreciation expense for 2020? b. Assume the same facts as in parte, and assume that the estimated useful life of the equipment is four years and the estimated salvage value is $23,900. Determine: 1. What the original cost of the equipment was. 2. What depreciation method is apparently being used. December 31, 2019 $101,425 3. When the equipment was acquired. c. Assume that the equipment is sold on December 31, 2020, for $56,000. Prepare the horizontal model and record the journal entry for the sale of the equipment. Indicate the financial statement effect. Complete this question by entering your answers in the tabs below.
The balance sheets of Tully Corp. showed the following at December 31, 2020, and 2019: December 31, 2020 $ 68,200 Equipment, less accumulated depreciation of $88,609 at December 31, 2020, and $55,375 at December 31, 2019. Required: a. If there have not been any purchases, sales, or other transactions affecting this equipment account since the equipment was first acquired, what is the amount of depreciation expense for 2020? b. Assume the same facts as in parte, and assume that the estimated useful life of the equipment is four years and the estimated salvage value is $23,900. Determine: 1. What the original cost of the equipment was. 2. What depreciation method is apparently being used. December 31, 2019 $101,425 3. When the equipment was acquired. c. Assume that the equipment is sold on December 31, 2020, for $56,000. Prepare the horizontal model and record the journal entry for the sale of the equipment. Indicate the financial statement effect. Complete this question by entering your answers in the tabs below.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 17P: On December 31, 2019, Vail Company owned the following assets: Vail computes depreciation and...
Related questions
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.
Topic Video
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning